BIDU(US:BIDU) Zhao Yin Guo Ji·2024-09-26 02:39Investment Rating - The report maintains a "Buy" rating for the company, with a target price of $180.50, indicating a potential upside of 90.4% from the current price of $94.81 [1]. Core Insights - The report highlights the advancements made by the company during the 2024 Cloud Intelligence Conference, focusing on the upgrade of its AI platforms, which are expected to enhance productivity and cloud service usage [1]. - The company's cloud business is projected to recover steadily, benefiting from scale effects and a higher profit margin due to the increasing revenue share from GPU cloud services [1]. - The valuation based on the Sum of the Parts (SOTP) method assigns a value of $32.2 per ADS for the cloud business, contributing to 17.8% of the total target valuation [1]. Financial Performance Summary - The company reported sales revenue of 134,598 million RMB for FY23A, with a year-on-year growth of 8.8% [2]. - Adjusted net profit for FY23A was 28,747 million RMB, reflecting a significant increase of 39.0% compared to the previous year [2]. - The forecast for FY24E anticipates a slight decline in adjusted net profit to 27,964 million RMB, representing a decrease of 2.7% [2]. Revenue and Profitability Trends - Sales revenue is expected to grow from 135,827 million RMB in FY24E to 157,928 million RMB by FY26E, with annual growth rates of 0.9%, 8.2%, and 7.5% respectively [2]. - The adjusted net profit margin is projected to stabilize around 20.6% in FY24E, with a gradual increase to 20.2% by FY26E [6]. Valuation Metrics - The company’s price-to-earnings (P/E) ratio is forecasted to decrease from 11.5 in FY23A to 9.4 by FY26E, indicating a potentially undervalued stock [7]. - The price-to-book (P/B) ratio is expected to decline from 0.9 in FY23A to 0.7 by FY26E, further suggesting attractive valuation levels [7]. Cash Flow Analysis - The operating cash flow for FY23A was reported at 36,615 million RMB, with projections of 37,930 million RMB for FY24E [6]. - The net cash flow from financing activities is expected to improve significantly, with a forecast of 1,997 million RMB by FY26E [6].