BIDU-SW(09888.HK)：1Q2022 RESULTS BEAT DUE TO STRONG AI CLOUD-格隆汇

机构：国泰君安国际
研究员：Vincent Liu

　　Baidu's non-GAAP shareholders' net profit in 1Q2022 decreased yoy by 9.7% to RMB3,879 million, higher than our and market expectation. Revenue from online marketing services decreased yoy by 6.4% yoy mainly due to weakened macroeconomy and industry, while that from other services increased yoy by 14.4%, primarily driven by strong AI cloud.
　　We expect revenue from online marketing services in 2022-2024 to be RMB75,484 million, RMB80,068 million and RMB82,749 million, respectively, representing yoy growth of -6.5%, 6.1% and 3.3%. We expect Baidu's advertising business to slow its recovery considering resurgence of the local COVID-19 epidemic in China.
　　We expect revenue from other services in 2022-2024 to be RMB50,244 million, RMB61,668 million and RMB75,371 million, respectively, representing yoy growth of 14.7%, 22.7% and 22.2%. We expect Baidu AI Cloud to maintain rapid growth despite potential impact of the local COVID-19 epidemic in the short term. And Apollo Go is expected to expand to more cities and to further push the process of commercialization.
　　We maintain our investment rating as "Buy" but revise down our target price to HK$190.00, representing 27.6x, 21.0x and 18.1x 2022-2024 non-GAAP PER. Despite short-term pressure on profitability during the period of business transition and on advertising growth due to weakened demand, we are confident in Baidu's ability to continuously lead the AI cloud and autonomous driving markets. We expect Non-GAAP shareholders’ net profit in 2022-2024 to increase by -17.5%, 41.5% and 25.8%, respectively.