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Baidu Inc 09888

Morningstar Rating
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Stock XHKG Rating as of
HKD 111.70 +3.30 (3.04%)
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As of Delayed Price Open
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Company Report

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Baidu: Lowering Fair Value by 5% Over Macro Headwinds Affecting Ad Business; Cloud Still Strong

Kai Wang

We are lowering our Baidu fair value estimate by 5% to USD 174 (HKD 171) per share from USD 183 (HKD 180), after lowering our annual revenue growth assumptions for Baidu’s advertising business to 4%-5% from 6% in 2025-29 as macroeconomic headwinds continue to mount. Previously, wide-moat Baidu indicated that the slow growth rate in the fourth quarter of 2023 was only temporary, with recovery expected in 2024, but we now believe visibility will be limited this year.

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Price vs Fair Value

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09888 is trading at a 732% premium.
Price
HKD 108.40
Fair Value
HKD 236.00
Uncertainty
High
1-Star Price
HKD 984.11
5-Star Price
HKD 484.10
Economic Moat
Nnws
Capital Allocation
Yjnqwfcbr

Bulls Say, Bears Say

Bulls

Baidu is strengthening its mobile ecosystem with search, livestreaming, and mini programs, helping to create a closed-loop experience for users to acquire information and make transaction.

Bears

Alibaba, Tencent, ByteDance, Kuaishou and other social media platforms are competing in terms of advertising budgets, which will result in slow growth in revenue for Baidu search.

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Trading Information

Previous Close Price
HKD 108.40
Day Range
HKD 110.80–114.00
52-Week Range
HKD 91.35–155.80
Bid/Ask
HKD 111.60 / HKD 111.70
Market Cap
HKD 313.34 Bil
Volume/Avg
10.0 Mil / 8.8 Mil

Key Statistics

Price/Earnings (Normalized)
9.69
Price/Sales
2.03
Dividend Yield (Trailing)
—
Dividend Yield (Forward)
—
Total Yield
0.47%

Company Profile

Baidu is the largest internet search engine in China with 84% share of the search engine market in September 2021 per web analytics firm, Statcounter. The firm generated 72% of core revenue from online marketing services from its search engine in 2022. Outside its search engine, Baidu is a technology-driven company and its other major growth initiatives are artificial intelligence cloud, video streaming services, voice recognition technology, and autonomous driving.
Sector
Communication Services
Industry
Internet Content & Information
Stock Style Box
Large Core
Total Number of Employees
45,500
Website
https://ir.baidu.com

Competitors

Valuation

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Metric
09888
BABA
03690
Price/Earnings (Normalized)
 9.699.7930.75
Price/Book Value
 1.111.524.68
Price/Sales
 2.031.682.58
Price/Cash Flow
 7.598.6427.02
Price/Earnings
09888
BABA
03690

Financial Strength

Metric
09888
BABA
03690
Quick Ratio
 2.751.711.57
Current Ratio
 3.011.801.82
Interest Coverage
 6.2993.0210.27
Quick Ratio
09888
BABA
03690

Profitability

Metric
09888
BABA
03690
Return on Assets (Normalized)
 4.44%8.98%8.68%
Return on Equity (Normalized)
 7.55%15.96%16.49%
Return on Invested Capital (Normalized)
 3.95%12.33%11.89%
Return on Assets
09888
BABA
03690
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