Main points of investment
Performance Overview: 2022Q1's total revenue was 28.4 billion yuan, up 1% from the same period last year. Excluding iQIYI, Inc. 's revenue, Baidu, Inc. 's core business, revenue for this quarter is 21.4 billion yuan, an increase of 4.4% over the same period last year, which is higher than the market's median expectation of 20.8 billion yuan. The net loss attributed to Baidu, Inc. was 885 million yuan, and the net loss of "Baidu, Inc. Core" was 963 million yuan, which was mainly affected by investment income. According to Non-GAAP, the net profit attributed to Baidu, Inc. is 3.9 billion yuan, the net profit of "Baidu, Inc. core" is 3.8 billion yuan, and that of "Baidu, Inc. core" is 3.8 billion yuan.
The net profit margin is 18%. The company's non-advertising revenue accounts for 27% of its core revenue, up 1% from the previous month, and Baidu, Inc. 's transformation is beginning to bear fruit.
Advertising 2022Q1-related revenue of 15.65 billion yuan, due to the impact of the epidemic, only decreased by 3.7% compared with the same period last year. Baidu, Inc. 's advertising business still has the advantages related to search business. In March 2022, the MAU of Baidu App rose 13% from the same period last year, while the MAU of Baidu, Inc. 's intelligent Mini Program reached 500 million, up 22% from the same period last year, indicating that the basic market of the search business is still solid.
Baidu, Inc. 's smart cloud business 2022Q1 revenue rose 45 per cent year-on-year to 3.9 billion yuan, accounting for 70 per cent of non-advertising revenue. Baidu, Inc. 's artificial intelligence cloud business is mainly composed of personal cloud services and enterprise / public cloud services. Among them, enterprise cloud and public cloud services, such as energy utilities, intelligent transportation, smart cities, etc., are the main drivers of growth. We expect that under the guidance of the national digital economy policy, enterprise cloud and public cloud will continue to drive the revenue growth of Baidu, Inc. 's artificial intelligence cloud business in the next few quarters.
The self-driving business has progressed steadily, and taxis with no one behind the 2022Q1 steering wheel have also been put into use in Beijing, with the first batch of 10 unmanned cars, followed by plans to add 30 more. This means that the self-driving service of "no one behind the steering wheel" has officially begun to open roads in China's mega-cities for the first time in the world, which is a full affirmation of Baidu, Inc. 's self-driving technology.
In terms of passenger cars, the Jidu joint venture with Geely will also launch concept models in June 2022.
The target market of Jidu Automobile is family cars, and the product is priced at about 200000 yuan. Self-driving technology for private cars will bring Baidu, Inc. a larger scale of income.
Profit forecast and investment rating: affected by the epidemic and investment losses, we downgrade our previous profit forecast and estimate that 2022-2024 will achieve EPS 3.88 (- 7.65) / 5.36 (- 0.40) / 6.75 (- 1.17) yuan, corresponding to 2022-2024 PE 28x16X. We believe that Baidu, Inc. 's advertising business can bring stable cash flow, while more than a decade of investment in artificial intelligence has begun to enter the harvest period, and the rapid growth of smart cloud and self-driving business will bring broad market space for Baidu, Inc.. Maintain a "buy" rating.
Risk hint: national policy risk; legal risk; own technical risk; competitor risk.