BIDU(09888) 东方证券·2024-11-26 04:55Investment Rating - The report maintains a "Buy" rating for Baidu with a target price of HKD 124.15 [5][11] Core Views - Baidu's total revenue for Q3 2024 was RMB 33.56 billion (YoY -2.6%), in line with Bloomberg expectations, while adjusted net profit was RMB 5.89 billion (YoY -19%) [3] - Core advertising revenue remains under pressure, with ad revenue at RMB 18.8 billion (YoY -4.6%), while non-marketing revenue grew 12.4% YoY to RMB 7.7 billion, driven by intelligent cloud business [3] - Baidu's gross margin for Q3 2024 was 51.1% (YoY -1.6pct), with core gross margin at 58.8% (YoY -1.3pct) [3] - AI capabilities are a long-term strategic focus, with Ernie Bot daily calls reaching 1.5 billion and user base at 430 million [3] - Intelligent driving commercialization is progressing, with RoboTaxi completing 988,000 rides in Q3 2024 (YoY +20%) and cumulative rides exceeding 8 million as of October 28, 2024 [3] Financial Performance - Baidu's core revenue for Q3 2024 was RMB 26.5 billion (YoY -0.2%), slightly better than Bloomberg's expectation of -0.8% YoY [3] - Adjusted operating profit margin for Baidu core was 25.1% in Q3 2024 (YoY +0pct, QoQ -1.1pct) [3] - For 2024E, Baidu's revenue is expected to be RMB 131.9 billion (YoY -2.0%), with adjusted net profit of RMB 26.5 billion [11] - The company's 2024E adjusted PE is maintained at 12x, implying a market cap of RMB 317.7 billion [11] AI and Cloud Business - Ernie Bot ecosystem has attracted 150,000 enterprises and 800,000 developers, with PaddlePaddle ecosystem serving 430,000 enterprises and creating 1.01 million models [3] - Over 60% of central state-owned enterprises and large private enterprises have chosen Baidu Intelligent Cloud for AI innovation [3] - Cloud business revenue in Q3 2024 was RMB 4.922 billion (YoY +11.0%), contributing significantly to non-marketing revenue growth [10] Intelligent Driving - RoboTaxi service completed 988,000 rides in Q3 2024 (YoY +20%), with cumulative rides exceeding 8 million as of October 28, 2024 [3] - The sixth-generation autonomous vehicle RT6 has been deployed in multiple cities [3]