BIDU(09888) 第一上海证券·2024-05-21 05:02Investment Rating - The report maintains a "Buy" rating for the company with a target price of 133 HKD, reflecting a 24% upside potential from the current stock price of 107 HKD [2][5][11]. Core Insights - The company's total revenue for Q1 2024 was 31.5 billion RMB, showing a year-over-year growth of 1% but a quarter-over-quarter decline of 10%, aligning with market expectations. Non-GAAP net profit reached 7 billion RMB, exceeding market forecasts with a year-over-year increase of 22% [1][6][11]. - The advertising business is experiencing slow growth, primarily due to a weak macroeconomic environment and slow recovery among small and medium-sized clients. The core online marketing revenue was 17 billion RMB, up 3% year-over-year [1][7]. - AI-driven cloud business is showing promising growth, with a 12% year-over-year increase in revenue, largely attributed to Gen AI and foundational models. Revenue from Gen AI accounted for approximately 330 million RMB in Q1 2024 [2][8]. Summary by Sections Financial Performance - Total revenue for Q1 2024 was 31.5 billion RMB, with a Non-GAAP operating profit of 6.7 billion RMB, reflecting a 4% year-over-year increase. Non-GAAP net profit was 7 billion RMB, marking a 22% increase year-over-year [1][6][10]. - The core business revenue was 23.8 billion RMB, with online marketing revenue at 17 billion RMB and non-online marketing revenue at 6.8 billion RMB [1][6][10]. Advertising Business - The core online marketing revenue grew by 3% year-over-year, but the growth rate is expected to decline in the second and third quarters of 2024 due to macroeconomic uncertainties [1][7][11]. - The mobile ecosystem remains stable, with 676 million monthly active users on the Baidu app, a 3% year-over-year increase [1][7]. AI and Cloud Business - The AI cloud revenue increased by 12% year-over-year, driven by Gen AI and foundational models, with Gen AI contributing 6.9% to the AI cloud revenue [2][8]. - The autonomous driving service provided 826,000 rides in Q1 2024, a 25% year-over-year increase, with plans to expand the fleet to 1,000 vehicles by the end of 2024 [2][8]. Valuation and Market Position - The report adopts a cautious valuation approach, not assigning a value to the cloud and autonomous driving businesses due to their uncertain profitability. The target price is based on a 15x PE ratio of the projected 2024 profits [2][11].