Baidu

This is our first report on Chinese internet behemoth, Baidu. Despite a difficult macro environment, Baidu achieved a solid performance, surpassing Wall Street expectations in terms of revenues as well as earnings. The company’s operating loss and margin year over year and quarter over quarter for AI Cloud improved. Their new AI businesses, like AI Cloud and Intelligent Driving, are in line with China’s national ambitions and digital innovation. In Q3, Apollo Go completed 474,000 rides, a 311% increase from the previous year. Besides, their third-quarter intelligent driving achievements included significant milestones, and the years of investment in this area are finally starting to pay off. Baidu Apollo Auto Solutions also topped CNY 11.4 billion in planned cumulative sales. Some of the most popular car models with ANP and AVP are anticipated to go on sale in the second part of next year. The management anticipates that this line of business will significantly contribute to revenue in 2024. Furthermore, Baidu is expanding its business on Apollo Go and will keep leading the field in autonomous ride-hailing. We initiate coverage on the stock of Baidu with a ‘Hold’ rating.