BIDU(09888) 国泰君安·2024-03-03 16:00Investment Rating - The report maintains a "Buy" rating for Baidu Group with a target price of 115 HKD [4][8]. Core Insights - Baidu's revenue growth is steady, with AI contributing significantly to revenue increases in advertising and cloud services. The incremental revenue from AI is expected to reach several billion RMB in 2024, indicating substantial profit potential as the AI ecosystem develops [2][8]. - The company is projected to achieve revenues of 1,435 billion, 1,569 billion, and 1,715 billion RMB for FY2024E, FY2025E, and FY2026E respectively, with year-on-year growth rates of 7%, 9%, and 9%. Adjusted net profits are expected to be 331 billion, 383 billion, and 432 billion RMB, reflecting growth rates of 15%, 16%, and 13% [2][8]. Summary by Sections 1. Performance Overview - Baidu achieved a revenue of 350 billion RMB in Q4 2023, a 6% year-on-year increase. Core revenue grew by 7% to 275 billion RMB, driven by an 8% increase in online marketing revenue, primarily from AI cloud services. Monthly active users of the Baidu app reached 667 million, a 3% increase year-on-year [2][3]. 2. Business Segment Performance - AI cloud revenue increased by 11% to 57 billion RMB, with generative AI applications contributing 4.8% to AI cloud revenue. The company’s gross margin improved by 1.4 percentage points, while operating profit margin increased by 1.5 percentage points. Adjusted net profit rose by 51% to 81 billion RMB, corresponding to a net profit margin of 23% [2][3][11]. 3. Investment Recommendations - The report anticipates that while the mobile ecosystem business may face pressure due to macroeconomic factors affecting advertising demand, AI will provide new revenue streams. The integration of AI into core operations is expected to enhance product quality and reduce operational costs. The revenue estimates for FY2024E, FY2025E, and FY2026E have been slightly adjusted to 1,435 billion, 1,569 billion, and 1,715 billion RMB respectively [2][8][11].