Earnings First Take: 4Q21 results beat; Cloud and AI-power-businesses growth remained robust

  • Revenue increased by 9% y-o-y to Rmb33.1bn in 4Q21, in line with market expectation
  • Non-GAAP net profit declined by 41% to Rmb5.1m, above market expectations of Rmb2.9m-3.2m
  • The outperformance was due to stronger Baidu Core revenue growth and narrowing operating loss of iQiyi
  • Expect positive share price reaction

What’s New
– Baidu (9888 HK) announced its 4Q21 results today after HK market close.

– Revenue increased by 9% to Rmb33.1bn in 4Q21, in line with market expectation.

– Baidu core revenue grew 21% to Rmb26bn, higher than market expectations. Revenue from iQiyi decreased 1% to Rmb7.4bn, below consensus of c.4% growth.

– Segment-wise, online marketing revenue increased by 1% to Rmb19.1bn; non-online marketing revenue rose 63% y-o-y to Rmb6.9bn, mainly driven by cloud and AI-powered businesses.

– Non-GAAP net profit declined by 41% to Rmb4.1m, above consensus forecast of Rmb2.9m-3.2m due to narrowing operating loss from iQiyi. The earnings decline was mainly due to stepped up R&D expenses on growth initiatives. 

Our View:
– We expect positive share price reaction.

– Overall performance was satisfactory with stronger Baidu core revenue growth, driven by Cloud and AI-powered businesses.

– We currently rate BUY on the counter with TP of HK$210/US$216.