20221123-招银国际-Earnings_beat_on_stringent_cost_control_5页

Baidu (BIDU US) Summary

Core Content

Baidu reported its 3Q22 financial results on 22 November, showing a revenue increase of 1.9% YoY to RMB32.5bn, which exceeded both the company's and Bloomberg's estimates. Non-GAAP net income reached RMB5.9bn, surpassing the forecast of RMB5.6/5.5bn, attributed to stringent cost control measures.

Main Points

• Revenue Growth:

  • 3Q22 revenue was RMB32.5bn, up 1.9% YoY.
  • Non-ad revenue grew 25% YoY and accounted for 26% of Baidu Core revenue, up from 21% in 3Q21.

• Business Progress:

  • Baidu Cloud revenue grew 24% YoY to RMB12.6bn, representing 18% of Baidu Core revenue (up from 15% in 3Q21).
  • Apollo Go provided over 474,000 rides in 3Q22, a 311% YoY increase and 65% QoQ growth.
  • ACE smart transportation was adopted in 63 cities in 3Q22, up from 24 cities in 3Q21.
  • Total projected accumulative sales of Baidu Apollo auto solutions reached RMB11.4bn, up 50% YoY.

• Ads Recovery:

  • Baidu Core revenue rose 2% YoY to RMB25.2bn (78% of total revenue), slightly higher than the estimate.
  • iQIYI revenue declined 2% YoY to RMB7.5bn.
  • Despite a 3.6% YoY decline in overall ads revenue to RMB18.7bn, feed ads and healthcare/retail verticals showed positive YoY growth.
  • Mobile search queries and feeds increased by double-digit and 23% YoY, respectively.

• Margin Improvement:

  • Gross profit margin (GPM) was 50% in 3Q22, up 0.5pp YoY and 0.1pp better than the forecast.
  • Non-GAAP operating profit margin (OPM) for the Baidu Group was 22.1%, surpassing the estimated 18.9%.
  • Baidu Core business non-GAAP OPM was 26.4%, exceeding the forecast of 22.6%.
  • iQIYI's non-GAAP OPM was 7.0%, 0.8pp ahead of the estimate, due to optimized content cost spending.

• Earnings and Valuation:

  • The company's financial summary indicates a consistent growth trend, with FY24E revenue expected at RMB149.8bn.
  • Adjusted net profit for FY24E is projected at RMB24.08bn.
  • The current P/E ratio is 14.1, with a target price of US$192.80, suggesting a potential upside of 100.9% from the current price of US$95.97.

Key Information

• Earnings Summary Table:

  • Revenue (RMB mn): FY20A (107,074), FY21A (124,493), FY22E (124,309), FY23E (137,657), FY24E (149,812).
  • YoY growth (%): FY20A (-0.3%), FY21A (16.3%), FY22E (-0.1%), FY23E (10.7%), FY24E (8.8%).
  • Adjusted net profit (RMB mn): FY20A (22,020), FY21A (18,830), FY22E (20,337), FY23E (20,494), FY24E (24,084).
  • EPS (Adjusted) (RMB): FY20A (63.93), FY21A (53.53), FY22E (57.24), FY23E (57.12), FY24E (66.45).
  • P/E (x): FY20A (13.1), FY21A (42.3), FY22E (23.5), FY23E (17.4), FY24E (14.1).

• Stock Data:

  • Market Cap (US$ mn): US$34,095.0.
  • Average 3 months trading (US$ mn): US$112.1.
  • 52-week High/Low (US$): 167.35/76.57.
  • Total issued shares (mn): 355.3.

• Shareholding Structure:

  • Robin Yanhong Li holds 16.5% of the shares.

• Share Performance:

  • 1-month: -6.2% absolute, -9.3% relative.
  • 3-months: -25.2% absolute, -13.0% relative.
  • 6-months: -19.3% absolute, -17.3% relative.

• Analyst Ratings:

  • BUY (Maintain): Target price of US$192.80.
  • CMBIGM Ratings: BUY indicates potential return of over 15% over the next 12 months.

Analyst Certification and Disclosures

• The research analyst certifies that the views expressed accurately reflect their personal views and that no compensation was tied to the report.
• The analyst confirms they did not trade in the stock covered in the report within 30 days prior to its release and will not do so within 3 business days after.
• The report is not tailored to individual investors and is not an offer to buy or sell securities.
• CMBIGM and its affiliates may have conflicts of interest and are not liable for any losses from reliance on the report.
• The report is intended solely for the use of intended recipients and may not be reproduced or distributed without prior written consent.

Important Disclosures

• There are risks involved in trading securities, and past performance does not guarantee future results.
• The information is based on analyses and is provided on an "AS IS" basis, subject to change without notice.
• CMBIGM may issue other reports with different information or conclusions.
• The report is subject to legal restrictions in the UK, US, and Singapore, and should be used accordingly.