BIDU(HK:09888) Soochow Securities·2024-03-01 16:00Investment Rating - The report maintains a "Buy" rating for Baidu Group-SW (09888.HK) [1] Core Views - The company's Q4 2023 performance exceeded expectations, driven by AI initiatives that are expected to fuel growth in 2024 [1][4] - The report highlights strong growth in advertising and cloud computing segments, with AI beginning to contribute incremental revenue [3][4] - The company is expected to benefit from its investments in generative AI and its first-mover advantage in the market [4][9] Financial Performance Summary - For Q4 2023, Baidu reported total revenue of 35 billion RMB, a year-on-year increase of 6%, and Non-GAAP net profit of 7.8 billion RMB, up 44% year-on-year, surpassing market expectations [2][3] - The core revenue from Baidu's advertising business reached 27.5 billion RMB, growing 7% year-on-year, with online marketing revenue at 19.2 billion RMB, a 6% increase [3] - Cloud revenue grew by 11% year-on-year to 5.7 billion RMB, driven by increased demand for model training and inference [3] Earnings Forecast and Valuation - The report adjusts revenue forecasts for 2024 and 2025 down to 143.2 billion RMB and 152.4 billion RMB, respectively, while projecting 2026 revenue at 160.7 billion RMB [4] - Non-GAAP net profit estimates for 2024-2026 are revised to 29 billion RMB, 31.5 billion RMB, and 35.2 billion RMB, respectively, with corresponding Non-GAAP P/E ratios of 8.8, 8.1, and 7.3 [9][4] - The report indicates that the company's strong cost control measures have exceeded expectations, contributing positively to profitability [4]