Main points of investment
Event: the company released the 1Q22 financial report, the group achieved revenue of 28.4 billion yuan, an increase of 1% over the same period last year. Among them, Baidu, Inc. 's core income reached 21.4 billion yuan, an increase of 4% over the same period last year, exceeding Bloomberg's consensus expectations by 3%; realizing Non-GAAP operating profit of 3.7 billion yuan, corresponding profit margin of 17.24%, and operating profit significantly exceeding Bloomberg's consensus expectations of 111%; the company's 1Q22 expense control was effective, Baidu, Inc. 's core sales & management expenses, and R & D expenses were 23% and 13% lower than Bloomberg's consensus expectations, respectively.
The advertising business is under pressure under the impact of the epidemic, waiting for the impact of the epidemic to fade and return to steady growth. Baidu, Inc. 's core online marketing business achieved 15.7 billion yuan in revenue, down 4% from the same period last year, which has affected the willingness of advertisers in tourism, investment promotion, health and other industries to a certain extent, thus dragging down the performance of the advertising business. Horizontal comparison, the impact of the headwind of the advertising industry on the company is relatively small in the first quarter, and we believe that the relatively scattered distribution of advertisers in the industry has strengthened the resilience of the advertising business to a certain extent. Looking ahead, in the short term, the impact of the epidemic in April and May is expected to continue, coupled with the high base of 2Q21, the advertising business is expected to be under more pressure in the second quarter than in the first quarter, but as the epidemic resumes, we expect the advertising business to return to steady growth:
1) maintain the growth of mobile ecological flow: the MAU of Baidu, Inc. APP reached 632 million as of March, an increase of 13% over the same period last year 2) the internal ecology based on smart Mini Program and landing pages continues to prosper: as of March, the MAU of Smart Mini Program reached 508 million, an increase of 22% over the same period last year, and the number also increased by 26% over the same period last year. Revenue from managed pages grew by 31%, accounting for 47% of the online marketing business. The increased penetration of smart Mini Program and managed pages is expected to optimize user experience and improve conversion efficiency.
Smart cloud drives the growth of non-online marketing business, looking forward to a double rise in revenue and profit margins. The revenue of non-online marketing business reached 5.7 billion yuan, an increase of 35% over the same period last year. Among them, Baidu, Inc. Intelligent Cloud achieved 3.9 billion yuan in revenue, an increase of 45% over the same period last year, which is the main driver of AI business revenue growth at this stage. It is true that the epidemic hinders the movement of people across cities, which to a certain extent will affect the deployment and expansion of cloud services business, resulting in delays in revenue recognition and a slowdown in growth, but we believe that with the recovery of the epidemic, the business is expected to record both revenue growth and profit margin improvement: by the end of 1Q22, more than 10 million contracts for ACE intelligent transportation systems had landed in 41 cities, a significant expansion compared with 16 in the same period last year. On the other hand, by promoting standardization, there has been a significant increase in efficiency in the deployment of the same type of business: for example, the smart city project in Guandu district of Kunming and the earlier Lijiang smart city project reduced deployment time by 50%.
Smart driving business is progressing smoothly, focus on the release of the first production car: 1Q22 radish fast run won 196000 of Robotaxi orders, and open operating cities increased by 2 to 10 cities compared with 4Q21. Among them, the company has successively obtained the permission to carry out commercialization in Beijing, Chongqing and Quanyang in 11M21 and 2M22, and the public road operation license and test license in 4M22 and 5M22 in Beijing and Chongqing. Further, according to the Apollo Day Open Day, since the start of commercialization in Yizhuang, Beijing, the user scale, frequency and stickiness have all increased steadily. The number of vehicles, station density and order density have all increased by more than 50% in the past six months, with a daily peak of 1575. In addition, after obtaining a fixed-point letter from BYD at the beginning of the year, the company received a fixed-point letter from Dongfeng Motor on 4M22, and the purchasing companies ANP, AVP and HD Maps. At present, the total amount of fixed-point letters and contracted projects obtained by the company is about 10 billion RMB. Jidu's first production car starts body mold casting, officially moving from vehicle design to the preparatory stage of vehicle mass production. The first car robot concept car will be officially released at the online launch of ROBODAY, and orders are expected to be accepted in the second half of this year and delivery of vehicles will begin in 2023.
Profit forecast and investment advice: we expect to achieve an income of 13041486max in 2022-2024, an increase of 5%, 14% and 8% over the same period last year, and the net profit of Non-GAAP homing to home is RMB 157max. Among them, the core income of Baidu, Inc. is 117512,128 billion yuan, an increase of 4%, 16% and 9% over the same period last year. We believe that the company's AI-centered non-online marketing business has great potential in the medium and long term, and the online marketing business is expected to return to steady growth after the recovery of the epidemic, resulting in a smooth shift of the company's overall growth engine and maintaining the company's "buy" rating.
Risk hint: macroeconomic fluctuation risk; non-online marketing business promotion is not as expected risk; industry competition aggravates risk.