Soochow Securities·2024-07-22 23:01Investment Rating - The report maintains a "Buy" rating for Baidu Group-SW (09888.HK) [1] Core Views - The company is expected to face pressure on advertising revenue, with a focus on the progress of AI and autonomous driving businesses [1][3] - For Q2 2024, total revenue is projected to be CNY 33.9 billion, with core revenue remaining flat at CNY 26.4 billion [3] - The adjusted net profit is anticipated to reach CNY 7.7 billion, with an adjusted operating profit of CNY 7.2 billion [3] Revenue and Profit Forecast - Total revenue (CNY million): - 2022A: 123,675 - 2023A: 134,598 - 2024E: 136,227 - 2025E: 145,349 - 2026E: 152,794 - Year-on-year growth rates: - 2023A: 8.83% - 2024E: 1.21% - 2025E: 6.70% - 2026E: 5.12% [2] - Non-GAAP net profit (CNY million): - 2022A: 20,680 - 2023A: 28,747 - 2024E: 29,761 - 2025E: 31,810 - 2026E: 34,121 - Year-on-year growth rates: - 2023A: 39.01% - 2024E: 3.53% - 2025E: 6.88% - 2026E: 7.27% [2] Business Segment Insights - Advertising business is expected to continue facing challenges, with a projected 4% decline in advertising revenue due to weak demand from sectors like automotive and real estate [3] - Cloud computing revenue is expected to grow by 14% year-on-year, reaching CNY 5.2 billion, with AI contributing a larger share [3] - The AI business is progressing steadily, with the user base for Wenxin Yiyan reaching 300 million and daily usage surpassing 500 million [3] - The autonomous driving business is highlighted, with significant advancements in safety and operational efficiency, aiming for breakeven in Wuhan by the end of 2024 [4] Adjusted Forecasts - Revenue forecasts for 2024-2026 have been adjusted downwards: - 2024: from CNY 139.3 billion to CNY 136.2 billion - 2025: from CNY 148.2 billion to CNY 145.3 billion - 2026: from CNY 155.7 billion to CNY 152.8 billion - Adjusted net profit forecasts have also been revised: - 2024: from CNY 30.9 billion to CNY 29.8 billion - 2025: from CNY 32.7 billion to CNY 31.8 billion - 2026: from CNY 35.1 billion to CNY 34.1 billion - Corresponding P/E ratio for 2024 is projected to be 8 times [4]