Investment Rating - The report maintains a "Buy" rating for Baidu Group-SW (9888.HK) with a target price of HKD 116.96, based on a current price of HKD 96.20 [1]. Core Insights - Baidu's core business remains robust, with AI becoming a new growth driver. In Q4 2023, the company reported revenue of RMB 35 billion, a year-on-year increase of 6%, and a Non-GAAP net profit of RMB 7.8 billion, up 44% year-on-year. For the full year 2023, total revenue reached RMB 134.6 billion, growing 9% year-on-year, while Non-GAAP net profit was RMB 28.7 billion, a 39% increase [2][3]. Summary by Sections Performance Summary - In Q4 2023, Baidu's online advertising revenue was RMB 19.2 billion, reflecting a 6% year-on-year growth, driven by recovery in sectors like travel and healthcare. The monthly active users (MAU) of Baidu APP reached 667 million, a 3% increase year-on-year [2]. - Non-marketing revenue in Q4 2023 was RMB 8.3 billion, up 9% year-on-year, with significant growth in smart cloud and autonomous driving services. The number of developers on the PaddlePaddle platform reached 10.7 million, serving 235,000 enterprises [2]. AI Commercialization - The commercialization of AI is progressing, with the Wenxin large model seeing over 50 million daily calls in Q4 2023, a 190% quarter-on-quarter increase. By December 2023, 26,000 enterprises were using the Wenxin model, a 150% increase from the previous quarter [2][3]. Earnings Forecast - The report forecasts adjusted EPS for Baidu for 2024-2026 to be RMB 10.76, RMB 11.44, and RMB 12.13 respectively. Non-GAAP net profit is expected to continue growing, supported by increasing advertising demand and the ongoing application of AI large models [3][10].

百度集团-SW（9888） 更新报告 买入 2023年3月4日 宏观疲软导致广告业务承压，AI变现能力待验证 罗凡环  收入和利润持续超市场预期，股票回购力度不足：23Q4 公司营业总收入为 350 亿元人 852-25321962 民币（YoY+6%，QoQ+1%），符合市场预期；Non-GAAP 经营利润 71 亿元（YoY+9%）； Simon.luo@firstshanghai.com.hk Non-GAAP 净利润 78 亿元（YoY+44%），大幅超市场预期。分业务看，百度核心收入 李京霖 275 亿元（YoY+7%）。其中，在线营销收入 192 亿元（YoY+6%），非在线营销收入 83亿元（YoY+9%）。Non-GAAP核心经营利润62亿元，；Non-GAAP核心净利润75亿 852-25321539 元。爱奇艺收入 77 亿元（YoY+2%），归属百度的净利润 4.66 亿，总体经营稳健。 Jinglin.li@firstshanghai.com.hk 自 23Q4 起，百度回购股票 318 百万美元，目前股份回购计划项下的累计回购额达 669 百万美元，剩余授权股票额度 43 亿美元。 ...

Investment Rating - The investment rating for Baidu Group-SW (09888.HK) is "Buy" [1][3]. Core Insights - Baidu Group achieved a total revenue of 35 billion yuan in Q4 2023, representing a year-on-year growth of 6%. The adjusted net profit attributable to shareholders was 7.8 billion yuan, up 40% year-on-year, with an adjusted net profit margin of 22% [1][5]. - The core revenue of Baidu grew by 7% year-on-year, while iQIYI's revenue increased by 2% [1][5]. - The online marketing revenue for Baidu's core business was 19.2 billion yuan, also reflecting a 6% year-on-year growth, driven by vertical industries such as travel and healthcare [1][12]. - The AI technology is expected to significantly reshape Baidu's advertising system, with the Wenxin large model projected to contribute billions in incremental revenue in 2024 [1][12][22]. - Baidu's intelligent cloud business maintained double-digit growth, with AI contributing 4.8% to the total revenue of the intelligent cloud segment [1][18]. Financial Performance and Forecast - For 2023, Baidu's total revenue is projected to be 134.6 billion yuan, with an 8.8% increase from the previous year. The adjusted net profit is expected to reach 28.7 billion yuan, marking a 39% increase [4][25]. - The adjusted EPS for 2024 is estimated at 10.73 yuan, with a projected revenue of 143.8 billion yuan [4][25]. - The company anticipates achieving an adjusted net profit of 30 billion yuan in 2024 and 31.8 billion yuan in 2025, with a new forecast for 2026 set at 34 billion yuan [1][23]. Business Segments - Baidu's core advertising revenue grew by 6% year-on-year, with the AI-driven advertising system enhancing the efficiency of ad placements [1][12]. - The intelligent cloud revenue for Q4 2023 was 5.6 billion yuan, reflecting an 11% year-on-year increase, with AI contributing significantly to this growth [1][18]. - The number of enterprises actively using Baidu's API reached approximately 26,000 in December, a 150% increase from the previous quarter [1][18].

Investment Rating - The report maintains a "Buy" rating for Baidu Group with a target price of 115 HKD [4][8]. Core Insights - Baidu's revenue growth is steady, with AI contributing significantly to revenue increases in advertising and cloud services. The incremental revenue from AI is expected to reach several billion RMB in 2024, indicating substantial profit potential as the AI ecosystem develops [2][8]. - The company is projected to achieve revenues of 1,435 billion, 1,569 billion, and 1,715 billion RMB for FY2024E, FY2025E, and FY2026E respectively, with year-on-year growth rates of 7%, 9%, and 9%. Adjusted net profits are expected to be 331 billion, 383 billion, and 432 billion RMB, reflecting growth rates of 15%, 16%, and 13% [2][8]. Summary by Sections 1. Performance Overview - Baidu achieved a revenue of 350 billion RMB in Q4 2023, a 6% year-on-year increase. Core revenue grew by 7% to 275 billion RMB, driven by an 8% increase in online marketing revenue, primarily from AI cloud services. Monthly active users of the Baidu app reached 667 million, a 3% increase year-on-year [2][3]. 2. Business Segment Performance - AI cloud revenue increased by 11% to 57 billion RMB, with generative AI applications contributing 4.8% to AI cloud revenue. The company’s gross margin improved by 1.4 percentage points, while operating profit margin increased by 1.5 percentage points. Adjusted net profit rose by 51% to 81 billion RMB, corresponding to a net profit margin of 23% [2][3][11]. 3. Investment Recommendations - The report anticipates that while the mobile ecosystem business may face pressure due to macroeconomic factors affecting advertising demand, AI will provide new revenue streams. The integration of AI into core operations is expected to enhance product quality and reduce operational costs. The revenue estimates for FY2024E, FY2025E, and FY2026E have been slightly adjusted to 1,435 billion, 1,569 billion, and 1,715 billion RMB respectively [2][8][11].

Investment Rating - The report maintains a "Buy" rating for Baidu Group-SW (09888.HK) [1] Core Views - The company's Q4 2023 performance exceeded expectations, driven by AI initiatives that are expected to fuel growth in 2024 [1][4] - The report highlights strong growth in advertising and cloud computing segments, with AI beginning to contribute incremental revenue [3][4] - The company is expected to benefit from its investments in generative AI and its first-mover advantage in the market [4][9] Financial Performance Summary - For Q4 2023, Baidu reported total revenue of 35 billion RMB, a year-on-year increase of 6%, and Non-GAAP net profit of 7.8 billion RMB, up 44% year-on-year, surpassing market expectations [2][3] - The core revenue from Baidu's advertising business reached 27.5 billion RMB, growing 7% year-on-year, with online marketing revenue at 19.2 billion RMB, a 6% increase [3] - Cloud revenue grew by 11% year-on-year to 5.7 billion RMB, driven by increased demand for model training and inference [3] Earnings Forecast and Valuation - The report adjusts revenue forecasts for 2024 and 2025 down to 143.2 billion RMB and 152.4 billion RMB, respectively, while projecting 2026 revenue at 160.7 billion RMB [4] - Non-GAAP net profit estimates for 2024-2026 are revised to 29 billion RMB, 31.5 billion RMB, and 35.2 billion RMB, respectively, with corresponding Non-GAAP P/E ratios of 8.8, 8.1, and 7.3 [9][4] - The report indicates that the company's strong cost control measures have exceeded expectations, contributing positively to profitability [4]

Investment Rating - The report maintains a "Buy" rating for the company, with expectations of a price increase of over 15% in the next 6-12 months [3][10]. Core Insights - The company reported a revenue of 350 billion yuan for Q4 2023, a year-on-year increase of 6%, and a total revenue of 1,346 billion yuan for the year, up 9% from the previous year [2]. - Non-GAAP net profit for Q4 2023 was 78 billion yuan, reflecting a 44% increase year-on-year, while the annual Non-GAAP net profit reached 287 billion yuan, up 39% [2]. - The core business showed stable growth in online marketing and a recovery in cloud business revenue, with Q4 core revenue reaching 275 billion yuan, a 7% increase year-on-year [2]. - The AI capabilities are beginning to generate incremental revenue, with the large model contributing approximately 6.56 billion yuan to cloud business revenue in Q4 2023 [2]. - The autonomous driving service "Luobo Kuaipao" saw a significant increase in order volume, reaching 839,000 orders in Q4 2023, a 49% year-on-year growth [2]. Financial Summary - The company expects revenues of 1,459 billion yuan, 1,590 billion yuan, and 1,718 billion yuan for 2024, 2025, and 2026 respectively, with Non-GAAP net profits projected at 282 billion yuan, 305 billion yuan, and 350 billion yuan for the same years [3][6]. - The current stock price corresponds to a Non-GAAP PE of 8.98, 8.30, and 7.24 for 2024, 2025, and 2026 respectively [3][6]. - The company’s revenue growth rate is projected to be 8.41% for 2024, 8.99% for 2025, and 8.03% for 2026 [6][7].

传媒/数字媒体 公 司 百度集团-SW（09888.HK）2023Q4 利润超预期，广告增速受制宏观环境 研 究 2024年03月01日 ——港股公司信息更新报告 投资评级：买入（维持） 吴柳燕（分析师） 荀月（联系人） wuliuyan@kysec.cn xunyue@kysec.cn 证 书编号：S0790521110001 证书编号：S0790122100036 日期 2024/2/29 港 当前股价(港元) 99.550  广告受宏观因素扰动，AI投入确认对利润率影响可控，维持“买入”评级 股 一年最高最低(港元) 159.00/94.300 考虑到百度核心及爱奇艺运营效率及盈利能力持续提升，我们上调公司 公 司 总市值(亿港元) 2,833.38 2024/2025年non-GAAP净利润预测至281/316亿元（前值:276/313亿元），新增 信 流通市值(亿港元) 2,784.19 2026年non-GAAP净利润预测341亿元，对应同比增速-2.2%/12.5%/7.9%，对应 息 更 总股本(亿股) 28.46 调整后摊薄 EPS 9.7/10.8/11.5 元，当前股价 99.55HK ...

Financial Performance - Total revenue for Q4 2023 was RMB 34,951 million, representing a 6% year-over-year increase[3] - Operating profit for Q4 2023 was RMB 5,392 million, a decrease of 17% compared to Q4 2022[3] - Net profit attributable to Baidu for Q4 2023 was RMB 2,599 million, down 48% year-over-year[3] - Total revenue for Q4 2023 was RMB 35 billion (USD 4.92 billion), a year-over-year increase of 6%[7] - Baidu's core revenue reached RMB 27.5 billion (USD 3.87 billion), up 7% year-over-year; online marketing revenue was RMB 19.2 billion (USD 2.70 billion), growing 6%[7] - Total revenue for the fiscal year 2023 was RMB 134.6 billion (USD 18.96 billion), a year-over-year increase of 9%[9] - The company achieved a total revenue of $4.5 billion for the quarter, reflecting a 15% increase compared to the previous year[13] - Total revenue for Baidu increased to RMB 34,447 million in Q3 2023, up 4.1% from RMB 33,077 million in Q3 2022[16] - Total revenue for Baidu Group in Q4 2023 reached RMB 34,951 million, a 6% increase year-over-year[20] - Total revenue for Baidu Group reached RMB 123.675 billion for the year ending December 31, 2022, representing an 8% year-over-year increase[22] Profitability Metrics - The adjusted EBITDA for Q4 2023 was RMB 9,057 million, a 10% increase year-over-year[3] - Operating profit for Q4 2023 was RMB 5.4 billion (USD 759 million), with a core operating profit margin of 17%[7] - Net profit attributable to Baidu was RMB 2.6 billion (USD 366 million), with a diluted earnings per ADS of RMB 6.77 (USD 0.95)[8] - Baidu's operating profit margin improved to 25%, up from 20% in the same quarter last year, indicating enhanced operational efficiency[14] - The adjusted EBITDA for the fiscal year was RMB 35.8 billion (USD 5.05 billion), with an adjusted EBITDA margin of 27%[10] - Baidu's operating profit (non-GAAP) for the year ended December 31, 2023, was RMB 28,433 million, representing an 18% increase year-over-year[23] - The net profit attributable to Baidu (non-GAAP) for the same period was RMB 28,747 million, reflecting a 39% year-over-year growth[23] - Baidu's adjusted EBITDA for the year ended December 31, 2023, was RMB 35,823 million, which is a 21% increase compared to the previous year[23] - The operating profit margin (non-GAAP) improved to 24% for the year ended December 31, 2023, up from 19% in the previous year[23] User Engagement - Monthly active users of Baidu APP reached 667 million in December 2023, a 3% increase year-over-year[6] - Baidu reported a significant increase in user engagement, with daily active users reaching 600 million, representing a 10% year-over-year growth[12] - The number of active users for Baidu's core services increased by 7% year-over-year in Q4 2023[20] - The company reported a significant increase in user engagement metrics, with a 68% year-over-year growth in active users for its core business[23] Research and Development - R&D expenses increased by 11% year-over-year to RMB 6.3 billion (USD 886 million), primarily due to depreciation costs related to generative AI[7] - Baidu plans to invest $500 million in research and development for new AI technologies over the next fiscal year, aiming to enhance its product offerings[12] - Research and development expenses for Q3 2023 were RMB 6,101 million, up from RMB 5,658 million in Q3 2022[16] - Research and development expenses totaled RMB 23.315 billion for the year ending December 31, 2022, accounting for 19% of total revenue[22] - Baidu's research and development expenses for the core business were RMB 6,140 million in 2023, up from RMB 5,977 million in 2022, indicating a commitment to innovation[29] Cash Flow and Investments - Free cash flow for Q4 2023 was RMB 7 billion (USD 980 million), and RMB 6.3 billion (USD 894 million) excluding iQIYI[8] - Cash, cash equivalents, restricted cash, and short-term investments totaled RMB 205.4 billion (USD 28.93 billion) as of December 31, 2023[8] - Cash and cash equivalents decreased to RMB 25,231 million as of December 31, 2023, down from RMB 53,156 million as of December 31, 2022[18] - Baidu's cash flow from operating activities for the three months ended December 31, 2023, was RMB 10,618 million, an increase from RMB 9,985 million in the same period last year[24] - The company's free cash flow for the twelve months ended December 31, 2023, was RMB 22,109 million, compared to RMB 18,129 million for the same period in 2022, indicating a year-over-year increase of 21.9%[25] - Baidu's cash flow from investing activities for the twelve months ended December 31, 2023, was a net outflow of RMB 48,657 million, compared to a net outflow of RMB 4,210 million for the same period in 2022, representing a significant increase in investment activities[25] Strategic Initiatives - Baidu plans to continue investing in generative AI and foundational models to create new growth engines[2] - The company anticipates a revenue growth of 12% to 15% for the next quarter, projecting total revenue between $4.8 billion and $4.95 billion[12] - Baidu is expanding its market presence in Southeast Asia, targeting a 20% increase in user acquisition in the region by the end of the fiscal year[12] - The company has initiated a strategic partnership with a leading cloud service provider to enhance its cloud computing capabilities, expected to contribute an additional $200 million in revenue[12] - The company is exploring potential acquisitions in the digital marketing space to strengthen its competitive position in the market[12] - The company plans to expand its market presence through strategic partnerships and new product launches in 2024[20] - The company is focusing on strategic acquisitions to enhance its market position and expand its service offerings[29]

Financial Performance - Total revenue for Q4 2023 was RMB 34,951 million, representing a 6% year-over-year increase[3] - Operating profit for Q4 2023 was RMB 5,392 million, a decrease of 17% compared to Q4 2022[3] - Net profit attributable to Baidu for Q4 2023 was RMB 2,599 million, down 48% year-over-year[3] - Baidu's core business revenue for Q4 2023 was RMB 27,488 million, an increase of 7% year-over-year[4] - Total revenue for the fiscal year 2023 was RMB 134.6 billion ($18.96 billion), a year-over-year increase of 9%[9] - Net profit attributable to Baidu was RMB 20.3 billion in 2023, a significant increase of 169% compared to the previous year[22] - Baidu's operating profit (non-GAAP) for the year ended December 31, 2022, was RMB 20,948 million, representing an 18% year-over-year increase to RMB 23,186 million for the year ended December 31, 2023[23] - The net profit attributable to Baidu (non-GAAP) increased by 38% year-over-year from RMB 19,935 million to RMB 27,418 million for the same periods[23] User Engagement - Monthly active users of Baidu APP reached 667 million in December 2023, a 3% increase year-over-year[6] - Baidu reported a significant increase in user engagement, with daily active users reaching 600 million, representing a 10% year-over-year growth[12] - The company reported a significant increase in user engagement metrics, with a 10% growth in active users year-over-year[21] Research and Development - R&D expenses increased by 11% year-over-year to RMB 6.3 billion ($886 million), primarily due to depreciation costs related to generative AI[7] - Research and development expenses for Q3 2023 were RMB 6,101 million, up from RMB 5,658 million in Q3 2022, reflecting a focus on innovation[16] - Research and development expenses totaled RMB 24.2 billion, representing a 4% increase year-over-year[22] - Baidu plans to invest $500 million in research and development for new AI technologies over the next fiscal year, aiming to enhance its product offerings[12] - The company is focusing on the development of new technologies, particularly in AI and autonomous driving, to drive future growth and innovation[29] Profitability Metrics - The adjusted EBITDA for Q4 2023 was RMB 9,057 million, a 10% increase year-over-year[3] - Adjusted EBITDA for Q4 2023 was RMB 9.1 billion ($1.28 billion), with an adjusted EBITDA margin of 26%[8] - The adjusted EBITDA margin, including stock-based compensation, was 28% in 2023[22] - Baidu's operating profit margin improved to 25%, up from 20% in the same quarter last year, indicating enhanced operational efficiency[14] - Baidu's operating profit margin improved to 16% in 2023, up from 13% in 2022[22] - Baidu's operating profit margin (non-GAAP) improved to 24% for the year ended December 31, 2023, compared to 22% in the previous year[23] Strategic Initiatives - Baidu plans to expand its market presence through strategic acquisitions and new product launches in the upcoming fiscal year[21] - Baidu is expanding its market presence in Southeast Asia, targeting a 20% increase in user acquisition in the region by the end of the fiscal year[12] - The company has initiated a strategic partnership with a leading cloud service provider, aiming to enhance its cloud computing capabilities and market reach[12] - Baidu plans to expand its market presence through strategic partnerships and potential acquisitions in the AI and cloud computing sectors to enhance its competitive edge[29] Cash Flow and Assets - Free cash flow for the fiscal year was RMB 25.4 billion ($3.58 billion), excluding iQIYI it was RMB 22.1 billion ($3.11 billion)[10] - Cash and cash equivalents decreased to RMB 25,231 million as of December 31, 2023, down from RMB 53,156 million as of December 31, 2022[18] - Total assets increased to RMB 406,759 million as of December 31, 2023, compared to RMB 390,973 million as of December 31, 2022[18] - The company's cash and cash equivalents at the end of December 31, 2023, were RMB 32,293 million, a decrease from RMB 57,374 million at the end of December 31, 2022[25] Future Guidance - The company anticipates a revenue growth of 12% to 15% for the next quarter, projecting total revenue between $4.8 billion and $4.9 billion[12] - Baidu's guidance for the next fiscal year indicates continued revenue growth, with expectations of reaching RMB 35,000 million in operating profit[29]

Investment Rating - The report maintains a "Buy" rating for Baidu Group-SW (9888.HK) with a target price of HKD 165.0, compared to the current price of HKD 109.9 [3]. Core Insights - Baidu Group is expected to achieve a total revenue of RMB 34.75 billion in Q4 2023, reflecting a year-on-year growth of 5.1%. The core revenue is projected to grow by 5.4% to RMB 27.03 billion [1]. - The report highlights the stable performance of advertising revenue, driven by the AI Native marketing platform "Qingge," which is anticipated to enhance conversion rates and ROI for advertisers [1]. - The demand for AI is expected to expand cloud service revenue, with non-online marketing business revenue projected to reach RMB 8.04 billion, a year-on-year increase of 5.7% [1]. Summary by Sections Revenue Forecast - Total revenue for Baidu Group is forecasted to be RMB 134.47 billion in 2023, with a growth rate of 8.73%. For 2024 and 2025, revenues are expected to reach RMB 146.89 billion and RMB 159.24 billion, respectively [2]. - Non-GAAP net profit is projected to be RMB 27.49 billion in 2023, with a growth rate of 32.92%, and is expected to increase to RMB 28.99 billion in 2024 [2]. Business Segments - Online marketing revenue is expected to grow by 4.9% to RMB 19 billion in Q4 2023, recovering to levels close to Q4 2021 [1]. - The AI marketing platform "Qingge" is in its early development stage but is expected to drive revenue growth in subsequent quarters [1]. - Baidu's cloud services are anticipated to benefit from new AI demands, contributing to revenue growth in the coming quarters [1]. User Engagement - The "Wenxin Yiyan" app has surpassed 100 million users, with active user engagement increasing significantly since its public launch [1]. - As of November 2023, the app recorded an average of 1.554 million daily active users [1]. Valuation and Profitability - The report slightly adjusts the Non-GAAP net profit forecasts for 2023-2025 to RMB 27.5 billion, RMB 29 billion, and RMB 33.1 billion, respectively [1]. - The valuation multiples assigned are 12.0x PE for advertising, 4.0x PS for smart cloud, and 4.5x PS for other businesses [1].