SIASUN(SZ:300024)2024-07-19 02:01Financial Data and Key Metrics Changes - The company expects core sales growth of +1% year-over-year and core adjusted operating profit to remain flat year-over-year in 2Q24, primarily due to challenges in advertising revenue [15][16] - Total net revenue for 2024E is revised to RMB 137,756 million, reflecting a -1% change, with net profit, non-GAAP, adjusted to RMB 28,082 million, a -2% change [27][34] - The current share price implies an 8X 2024E PE, indicating that the market is not assigning value to the company's cash reserves or its Apollo/Robotaxi business [4][16] Business Line Data and Key Metrics Changes - Advertising revenue for Baidu is projected to decline by 2% year-over-year in 2Q24, with a slight recovery expected by the end of the year [15][16] - The AI Cloud business is anticipated to grow by 15% in 2Q24, up from 12% in 1Q24, indicating a positive trend in cloud services [15][16] - The autonomous driving segment, including the Apollo project, is currently loss-making, with estimated losses of RMB 3-4 billion annually, but losses are expected to narrow by 2025 [4][16] Market Data and Key Metrics Changes - The overall advertising market is facing softness due to weak macroeconomic conditions, impacting Baidu's revenue [4][15] - The company has seen a month-over-month increase in daily active users (DAU) for its Ernie AI platform, reaching 1.9 million, which is a positive sign for its AI initiatives [11][15] Company Strategy and Development Direction - Baidu is focusing on enhancing its search experience through AI initiatives, which is expected to improve advertising revenue in the long term [4][15] - The company is also investing in its autonomous driving technology, with a long-term goal of achieving significant market penetration in the Robotaxi segment by 2030 [4][15] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the slower recovery in macroeconomic conditions and advertising spending, which could impact future growth [12][34] - The company remains optimistic about the growth potential of its AI Cloud services and expects to see continued improvement in this area [15][34] Other Important Information - Key risks identified include slower recovery in macro and advertising spending, increased competition in the advertising/search industry, and potential delays in autonomous driving milestones [12][34] - The company's cash reserves amount to approximately US$19 billion, representing 60% of its market cap, which provides a buffer against market volatility [4][16] Q&A Session Summary Question: What are the expectations for advertising revenue recovery? - Management expects advertising revenue to turn positive by the end of the year, despite current softness due to macroeconomic challenges [4][15] Question: How is the AI Cloud business performing? - The AI Cloud business is projected to grow at a rate of 15% in 2Q24, indicating strong demand for AI-related services [15][16] Question: What are the anticipated losses from the autonomous driving segment? - Estimated losses from the autonomous driving segment are around RMB 3-4 billion annually, but management expects these losses to narrow by 2025 [4][16]