BIDU-SW(09888.HK)：STRONG AI CLOUD AND INTELLIGENT DRIVING BUT WEAK ADVERTISING-格隆汇

机构：国泰君安国际
研究员：Vincent Liu

　　Baidu's non-GAAP shareholders' net profit in 4Q2021 decreased yoy by 40.5% to RMB4,084 million. Revenue from online marketing services increased yoy by 0.1% mainly due to weakened macroeconomy and influence from regulations, while that from other services increased yoy by 29.4% primarily driven by cloud and other AI-powered businesses. 2021 total revenue increased by 16.3% to RMB124,493 million but non-GAAP shareholders' net profit decreased by 14.5% to RMB18,830 million.
　　We expect revenue from online marketing services in 2022-2024 to be RMB81,593 million, RMB85,367 million and RMB89,560 million, respectively, representing yoy growth of 1.1%, 4.6% and 4.9%. We expect Baidu's advertising business to face pressure from competitors and the weakened industry.
　　We expect revenue from other services in 2022-2024 to be RMB54,678 million, RMB68,521 million and RMB84,699 million, respectively, representing yoy growth of 24.8%, 25.3% and 23.6%. For Baidu AI Cloud, market share increased in 4Q2021 and outperformed the industry. For intelligent driving, commercialization is accelerating mainly due cooperation with more vehicle manufacturers and continuous expansion of Apollo Go.
　　We maintain our investment rating as "Buy" but revise down our target price to HK$225.00. Despite short-term pressure on profitability during the period of business transition, we are confident in Baidu's ability to grasp opportunities of China's development of industrial internet and NEVs. Our target price represents 28.7x, 21.6x and 17.2x 2022-2024 non-GAAP PER