基本面改善仍需时间，新业务稳步扩张

Target PriceUS$130.30(Previous TPUS$144.60)Up/Downside51.0%Current PriceUS$86.32China InternetSaiyi HE, CFA(852) 3916 1739hesaiyi@cmbi.com.hkYe TAO, CFAfranktao@cmbi.com.hkWentao LU, CFAluwentao@cmbi.com.hkJoanna Ma(852) 3761 8838joannama@cmbi.com.hkStock DataMktCap (US$ mn)30,190.4Avg 3 mths t/o (US$ mn)52w High/Low (US$)115.13/76.86Total Issued Shares (mn)Source: FactSetShareholding StructureHandsome Reward LimitedBlackRock, Inc.Source: HKExShare PerformanceAbsoluteRelative0.4%4.5%4.1%Source: FactSet12-mth Price PerformanceSource: FactSet 79.7349.816.1%4.6%1-mth-5.5%3-mth-17.9%6-mth-1.4% PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANTDISCLOSURES ON LAST PAGEChanges in forecast and valuationFigure1:Baidu forecast revisionCurrentRMB bn2025E2026E2027ERevenue132.4138.2143.6Grossprofit60.164.767.6Non-GAAP net profit18.922.324.2Grossmargin45.4%46.8%47.1%Non-GAAP net margin14.3%16.2%16.9%Source: CMBIGM estimatesSOTP valuation of US$130.3per ADSOurnewSOTP-based target price comprises, per ADS:1) US$36.6for Baidu Core (mainly including the core ads business,excluding Apollo andBaidu Cloud), based on5.0x 2025E non-GAAP PE(was US$48.2based on 5.0x 2025EPE);2) US$0.3for Apollo ASD(unchanged), based on 2.0x 2030E revenue, and discountedback using a 13.0% WACC.3) US$37.5for Baidu Cloud(was US$38.8), based on3.4x 2025E PS;4) US$55.9fornet cash,iQIYI and other investments(was US$57.3), with a 30% holdingdiscount applied to theper share valuationofUS$79.8.Figure2:Baidu: SOTP valuationSegmentNOPAT(USDmn)Valuationmethod/multipleCore business and cash1) Baidu core (ex-Apolloand Cloud)2,5635.02) Apollo ASD3) Baidu Cloud (ex-ASD)3.4Valuation of corebusinessiQIYI, strategic investment, and net cash1) iQIYIMarket value2) Trip.comgroupMarket value3) UxinMarket value4) HAND EnterpriseSolutionsMarket value5) KuaishouMarket value6) Yusys TechnologiesMarket value4) Net cashCMBI estimatesValuation of iQIYI, investments, and net cash Valuation(RMBmn)92,27094,51612,896326,0707,00612,271274,95915,260148,999 Valuation(USDmn)Baidu'sstakeValuationofBaidu'sstake(USDmn)12,815100.012,81571499100.013,127100.013,12726,0421,79145.445,28810.89739.12,5315.338,1893.12,1195.120,694100.020,69427,915 PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANTDISCLOSURES ON LAST PAGESource:Company data, CMBIGM estimatesNote: American depositary share (ADS); iQIYI (IQ US); Trip.com Group (TCOM US); Uxin (UXIN US); HAND Enterprise solution (300170 SH);Kuaishou (1024 HK); Yusys Technologies (300674 SH)Risks1)Slower-than-expected ramp-up inrevenue generation from Gen-AI related business.2)Slower-than-expected margin expansion. PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ONLAST PAGEDisclosures& DisclaimersAnalyst CertificationThe researchanalyst who is primary responsible for the content of this research report, in whole or in part, certifies that with respectto the securities or issuerthat the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neitherthe analyst nor his/her associates (as defined in the code of conduct issued by The Hong Kong Securities and FuturesCommission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to thedate of issueof this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3)serve as an officer of any of the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed companies covered in this report.CMBIGM RatingsBUY: Stock with potential return of over 15% over next 12 monthsHOLD: Stock with potential return of +15% to-10% over next 12 monthsSELL: Stock withpotential loss of over 10% over next 12 monthsNOT RATED: Stock is not rated byCMBIGMOUTPERFORM:Industry expected to outperform the relevant broad market benchmark over next 12 monthsMARKET-PERFORM:Industry expectedto perform in-line with the relevant broad market benchmark over next 12 monthsUNDERPERFORM:Industry expected to underperform the relevant broad market benchmark over next 12 monthsCMB InternationalGlobal MarketsLimitedAddress:45/F, Champion Tower, 3 Garden Road, Hong Kong, Tel: (852) 3900 0888 Fax: (852) 3900 0800CMB InternationalGlobal MarketsLimited (“CMBIGM”) is a wholly owned subsidiary of CMB International Capital Corporation Limited (a wholly ownedsubsidiary of China Merchants Bank)Important DisclosuresThere are risks involved in transacting in any securities. The information contained in this report may not be suitable forthe purposes of all investors.CMBIGMdoes not provide individually tailored investment advice. This report has been prepared without regard to