Changjiang Securities believes that the overall performance of Baidu's core business is in line with market expectations, and GenAI has driven good growth in online marketing and smart cloud businesses.
The Zhitong Finance App learned that Changjiang Securities released a research report stating that maintaining Baidu Group-SW (09888) “buy” rating, the company is expected to achieve revenue of 1462.02/1568.63/166.768 billion yuan in 2024-2026; net profit to mother of 230.9/260.43/29.011 billion yuan. The company released 23Q4 results. The company achieved revenue of 34.951 billion yuan in 23Q4, an increase of 6% over the previous year, which is basically in line with market expectations. In addition, a total of US$318 million of shares were repurchased in 23Q4, with a cumulative repurchase amount of US$669 million over 23 years.
The main views of Changjiang Securities are as follows:
Baidu's core business revenue is in line with market expectations, and GenAI is gradually contributing revenue.
Baidu Core achieved revenue of 27.5 billion yuan in 23Q4, in line with the unanimous expectations of the market. Among them, the online marketing business achieved revenue of 19.2 billion yuan, an increase of 6% over the previous year. The bank believes that it will mainly benefit from the recovery in demand from advertisers in healthcare, travel, etc.; in addition, the company expects AI to contribute hundreds of millions of yuan in online marketing revenue. With AI support, the new marketing platform will effectively improve advertisers' conversion efficiency and drive up advertisers' budgets. The non-online marketing business achieved revenue of 8.3 billion yuan, an increase of 9% over the previous year.
The bank believes that Baidu Smart Cloud's revenue growth has partly benefited from incremental contributions from AI technology. According to Baidu's performance, 23q4GenAI contributed 656 million yuan to Baidu Smart Cloud's total revenue, accounting for 14%/4.8% of internal/external revenue, respectively. The bank believes that the overall performance of Baidu's core business is in line with market expectations, and GenAI is driving good growth in online marketing and intelligent cloud businesses.
Actively invested in AI research, AI technology is progressing well.
The company continues to iterate AI technology, and the commercialization process of GenAI continues to accelerate. In terms of AI technology, the inference cost of EB3.5 has now been reduced to 1% in March 2023, and Ernie's efficiency continues to improve. Currently, Ernie processes more than 50 million queries per day. About 26,000 companies used ErnieAPI on the cloud in December '23, an increase of 150% over the previous year. The bank believes that the development of AI technology can help Baidu effectively improve the eCPM of its advertising business and effectively build AI solutions for customers to drive up cloud computing business revenue, and the GenAI commercialization process is expected to continue to accelerate. According to Baidu, AI is expected to contribute several billion yuan in incremental revenue in 2024. The bank believes that the iteration of the company's AI technology is expected to open up room for growth in the company's business and achieve both growth in performance and valuation.