Event: Baidu, Inc. released the Q1 quarterly results report for 2022 on May 26, 2022. The company's 22Q1 realized operating income of 28.411 billion yuan (YoY + 0.98% QoQ-14.14%), Non-GAAP operating profit of 3.996 billion yuan (YoY-8.39% QoQ-7.22%), Non-GAAP net profit of 3.879 billion yuan (YoY-9.73% last QoQ-5.02%), adjusted EBITDA 5.499 billion yuan (YoY-6.80% last QoQ-4.48%), homing net profit of-885 million yuan, and month-on-month profit turned from profit to loss.
Core ideas:
The revenue and profits of the core business exceeded expectations, and the second curve "cloud business" continued to stride forward: Baidu, Inc. 's revenue in the current quarter was 28.4 billion yuan, up 1% from a year earlier, while Bloomberg's consensus forecast was 27.9 billion yuan, slightly exceeding expectations. Smart cloud business performed well, growing 45% year-on-year to 4.1 billion yuan, accounting for 19% of the total, up from 14% in the same period last year. We expect cloud business to play a more important role in Baidu, Inc. 's new round of growth. Under the premise that the growth of advertising marketing business is in a bottleneck, intelligent cloud business is the main driving force to promote the medium-and long-term sustainable growth of enterprises. Net profit under Non-GAAP reached 3.9 billion yuan, while Bloomberg's consensus forecast was 1.8 billion yuan, well ahead of expectations. Under the challenge of many uncertainties that Baidu, Inc. faces in the short term, Baidu, Inc. handed over a steady answer this quarter.
The advertising business is facing severe challenges affected by the epidemic, and the impact is expected to continue in the second quarter, and the expected recovery depends to a large extent on the development of the epidemic. Since mid-March, Baidu, Inc. 's core business advertising and cloud plates have been affected by O'Micron virus mutants. So far, the impact has lasted for more than two months, and will continue in the short term. For Baidu, Inc. 's customers, many business activities are restricted and growth expectations are unstable, so we expect advertisers to reduce their advertising budget to a certain extent in a short period of time. Projects for smart cloud businesses, especially enterprise and public clouds, have also been delayed. The inflection point of business recovery depends largely on the progress of the epidemic.
Due to economic uncertainty, Baidu, Inc. carefully manages sales and management expenses. We expect "guaranteed profit" & "cost control" will be the theme: in the first quarter of 2022, Baidu, Inc. 's sales and general administrative expenses reached 4.66 billion yuan. the proportion of revenue is 16%, a decrease of about 3% from the same period last year and 3% from the previous year. Prudent investment in sales and management expenses has directly or indirectly improved profitability in the quarter, and we believe that cost control is the first factor affecting higher-than-expected profits.
Autopilot business is moving forward in an orderly manner, and new progress has been made in commercialization: 1. Baidu, Inc. promotes ASD business in an orderly manner. Following Baidu, Inc. 's harvest of cooperation orders from BYD at the beginning of the year, in April this year, Baidu, Inc. reached an agreement with Dongfeng Motor, the third largest domestic automaker, to use ANP (pilot-assisted driving), AVP (autonomous parking) and Gaojing Map (HD Map) in one of its best-selling models; the number of orders for radish fast running in the first quarter of 2.2022 was 196,000, compared with 213,000 in the fourth quarter of last year. On April 28 and May 20, 2022, radish fast running was granted an unmanned license by Beijing Yizhuang autopilot, and the unmanned self-driving travel service was officially opened on the open road in Yizhuang, Beijing. In May 2022, turnip Express obtained the test license for the first self-driving self-driving vehicle in Chongqing. Radish fast run now covers ten cities, and Wuzhen and Wuhan have been added in Jiaxing this quarter.
The signal of "bottoming" on the policy side is obvious, and the policy side will support economic development and the digital economy: according to People's Daily, China supports platform enterprises and the platform economy, and strives to adapt to the omni-directional changes brought about by the digital economy. improve overall national strength and international competitiveness. The research supports the healthy development of the platform economy. Baidu, Inc. assumes social responsibility to export AI technology and industrial application talents to society and industry, while promoting high technology, led by self-driving, to make sustainable contributions to the innovative economy.
Profit forecast and investment advice: we continue to be optimistic about the long-term health and sustainability of the company's overall business. As the advertising business is affected by the Q1 epidemic, our customers' business activities are restricted. We slightly reduced Baidu's operating income from 2022 to 2024 to 1276.2x142.94 billion (previously forecast for 2022-2024 1405.9 Non-Gaap 178.33 billion yuan), and the net profit for 2022-2024 was 161max 20024 billion. According to the STOP valuation method, we give Baidu, Inc. a reasonable target market capitalization of 367.91 billion yuan (HK $433.31 billion) for fiscal year 2022, maintaining a "buy" rating.
Risk Alert event:
1. The business performance of online marketing may be adversely affected by the macro-economy and advertising market environment.
2. As a new industry, Robotaxi (shared unmanned car business) may not be as profitable as expected due to the delay of the policy or the low acceptance of the business.
3. The information and data used in the research and report are not updated in time.