BIDU(09888) 天风证券·2024-07-12 06:02Investment Rating - The investment rating for Baidu Group-SW (09888) is "Buy" with a target price of 139 HKD, maintaining the rating [3]. Core Insights - Baidu's Q1 2024 total revenue was 31.5 billion HKD, a year-on-year increase of 1.2%, while Non-GAAP net profit reached 7 billion HKD, up 22% year-on-year [1]. - The Baidu Core revenue for Q1 2024 was 23.8 billion HKD, reflecting a 3.5% year-on-year growth, with online marketing revenue at 17.1 billion HKD, also up 3% year-on-year [1]. - Non-online marketing revenue was 6.8 billion HKD, a 6% increase year-on-year, primarily driven by the intelligent cloud business [1]. - AI Cloud revenue reached 4.7 billion HKD, growing 12% year-on-year, with generative AI contributing significantly [1]. - The average monthly active users for Baidu in March was 676 million, a 3% increase year-on-year [1]. Summary by Sections Financial Performance - In Q1 2024, Baidu's Non-GAAP operating profit was 6.7 billion HKD, with Baidu Core contributing 5.6 billion HKD, resulting in an operating profit margin of 24% [1]. - The reasoning behind the profit increase is attributed to Baidu's unique four-layer AI architecture and end-to-end optimization capabilities, which significantly reduced the reasoning costs of ERNIE [1]. AI and Cloud Services - Baidu is leveraging its four-layer AI technology stack to optimize the cost and performance of the ERNIE model, expecting robust revenue growth in Q2 2024 [1]. - The company has launched and improved its MaaS platform tools for enterprise clients, generating 17 billion HKD from online marketing in Q1 2024 [1]. - The developer community for Baidu's PaddlePaddle deep learning framework has grown to 13 million, with compatibility for over 50 different chips [1]. Strategic Partnerships and Future Outlook - Baidu has formed partnerships with major smartphone manufacturers and automotive companies, which are expected to contribute to AI cloud revenue growth [2]. - The autonomous driving service "Luobo Kuaipao" provided approximately 826,000 orders in Q1 2024, a 25% year-on-year increase [2]. - Baidu plans to expand its fully autonomous vehicle fleet to 1,000 units by the end of 2024, tripling its previous capacity [2].