BIDU(HK:09888) EBSCN·2024-02-25 16:00Investment Rating - The report maintains a "Buy" rating for Baidu Group-SW (9888.HK) with a target price of HKD 165.0, compared to the current price of HKD 109.9 [3]. Core Insights - Baidu Group is expected to achieve a total revenue of RMB 34.75 billion in Q4 2023, reflecting a year-on-year growth of 5.1%. The core revenue is projected to grow by 5.4% to RMB 27.03 billion [1]. - The report highlights the stable performance of advertising revenue, driven by the AI Native marketing platform "Qingge," which is anticipated to enhance conversion rates and ROI for advertisers [1]. - The demand for AI is expected to expand cloud service revenue, with non-online marketing business revenue projected to reach RMB 8.04 billion, a year-on-year increase of 5.7% [1]. Summary by Sections Revenue Forecast - Total revenue for Baidu Group is forecasted to be RMB 134.47 billion in 2023, with a growth rate of 8.73%. For 2024 and 2025, revenues are expected to reach RMB 146.89 billion and RMB 159.24 billion, respectively [2]. - Non-GAAP net profit is projected to be RMB 27.49 billion in 2023, with a growth rate of 32.92%, and is expected to increase to RMB 28.99 billion in 2024 [2]. Business Segments - Online marketing revenue is expected to grow by 4.9% to RMB 19 billion in Q4 2023, recovering to levels close to Q4 2021 [1]. - The AI marketing platform "Qingge" is in its early development stage but is expected to drive revenue growth in subsequent quarters [1]. - Baidu's cloud services are anticipated to benefit from new AI demands, contributing to revenue growth in the coming quarters [1]. User Engagement - The "Wenxin Yiyan" app has surpassed 100 million users, with active user engagement increasing significantly since its public launch [1]. - As of November 2023, the app recorded an average of 1.554 million daily active users [1]. Valuation and Profitability - The report slightly adjusts the Non-GAAP net profit forecasts for 2023-2025 to RMB 27.5 billion, RMB 29 billion, and RMB 33.1 billion, respectively [1]. - The valuation multiples assigned are 12.0x PE for advertising, 4.0x PS for smart cloud, and 4.5x PS for other businesses [1].