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| HSCEI1 | 7,460.84 | -147.54 | 100.47B |
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2026-06-26 14:42:29 BOCOM International issued a report on BIDU-SW (09888.HK), of which earnings inflection point is expected to emerge in 2H26, while reflection of near-term catalysts is on the way. The broker raised the US share TP of Baidu, Inc. (BIDU.US) to USD175 and assigned a Buy rating. The deepening AI transformation has not yet been fully re-rated, the report noted. Since accelerating and deepening its AI transformation in 2025, the proportion of Baidu, Inc.'s AI new businesses in its core business reached 52% in 1Q26. However, the broker opined the market may not have fully re-rated the growth of Baidu, Inc.'s AI new businesses. According to the broker, market concerns mainly include: (1) after shifting toward an AI infrastructure + foundation model + chip model that is more asset-heavy, Baidu will see accelerated capex over the next three years, bringing short-term pressure on gross margin and cash flow of its core business; (2) although AI new business revenue delivered YoY growth surprises (47%/49% YoY in revenue in 2025/1Q26), the revenue and gross profit base of the traditional advertising business remains relatively high, and the growth momentum of AI new businesses over the past four quarters has not been sufficient to drive overall YoY earnings growth of the core business. BOCOM International stated that the recent share price pullback alongside the index correction presents a better buying opportunity, while awaiting near-term catalysts. The broker valued the AI business at 3x 2026E PS, the traditional advertising business at 1x PS, and its approximately 58% stake in Kunlunxin at 20x 2026E PS. Together with the company’s net cash and short-term investments, a SOTP valuation yields TP of USD175 for the US shares and HKD171.7 for the H shares, with a Buy rating maintained. ~ AASTOCKS Financial News Website: www.aastocks.com | |