BIDU(09888) 光大证券·2025-01-23 11:48Investment Rating - The report maintains a "Buy" rating for Baidu Group-SW (9888.HK) with a target price of HKD 128.7, compared to the current price of HKD 80.15 [3]. Core Views - Baidu Group is expected to experience a revenue decline of 4.5% year-on-year in Q4 2024, with total revenue projected at RMB 33.37 billion. The core revenue is anticipated to decrease by 2.5% to RMB 26.79 billion. The non-GAAP operating profit is expected to drop by 28.9% to RMB 4.41 billion, resulting in an operating margin of 16.5% [1]. - The online marketing business remains under pressure, but there are expectations for stabilization and gradual recovery in 2025, driven by AI commercialization efforts [1]. - Non-online marketing business, particularly cloud services, is showing promising growth, with Baidu's AI features attracting a significant number of paid users [1]. Summary by Sections Revenue Forecast - For Q4 2024, Baidu's total revenue is projected at RMB 33.37 billion, a 4.5% decline year-on-year. The core revenue is expected to be RMB 26.79 billion, down 2.5% [1][11]. - The online marketing services revenue is forecasted to decrease by 8.9% to RMB 17.48 billion, influenced by a weak macro environment and the ongoing transformation of user search through generative AI [1]. Profitability - The non-GAAP net profit for Q4 2024 is expected to be RMB 3.99 billion, with a net profit margin of 12.0% [1]. - The report revises the non-GAAP net profit forecasts for 2024-2026 to RMB 24.3 billion, RMB 25.6 billion, and RMB 28.0 billion, respectively, reflecting a downward adjustment of 8.3%, 7.8%, and 4.6% from previous estimates [1][12]. Business Segments - The non-online marketing business is projected to grow by 12.3% year-on-year in Q4 2024, reaching RMB 9.32 billion. This growth is attributed to the increasing demand for Baidu's cloud services and the successful monetization of Baidu Wenku's AI features, which have seen paid user numbers exceed 40 million [1]. - Baidu's AI capabilities continue to strengthen, with significant user engagement in AI applications and the introduction of innovative products like AI glasses [1][10]. Valuation - The report assigns a valuation multiple below the industry average for 2025, with advertising, smart cloud, and other businesses valued at 10.0x PE, 2.5x PS, and 3.0x PS, respectively. The target price is adjusted to HKD 128.7 [1][3].