Business Description
Baidu is a leading technology company in China. Its mission is to make the complicated world simpler through technology. Baidu's product line is very similar to Alphabet, although with less success and is mostly confined to China. It owns the top search engine in China: Baidu, which has about 70% market share in China. Besides that, it also owns the following popular apps and services:
Baidu Maps: 520 million MAU (second to Gaode Map in China, or Amap, 605 million MAU)
Various consumer mobile apps: Baidu Baike (an online encyclopedia), Baidu Tieba (a popular online forum), and Baidu Knows (a question-and-answer platform), Haokan, Quanmin
Baidu Cloud: consumer cloud storage service
AI Cloud: Enterprise cloud solution
DuerOS: The operating system for its Xiaodu smart devices. Xiaodu has over 200 million connected devices.
Apollo: A suite of technology that supports L3 and L4 self driving. It also operates Apollo Robotaxi, which is running pilot programs in Beijing, Changsha, and Cangzhou. Since 2020, Baidu fully opened the Apollo Robotaxi service to public in Beijing.
EV company: formed with Zhejiang Geely Holding Group for Intelligent EVs
Ernie-Bot: a counterpart of ChatGPT
iQiyi: Baidu owns 53% of this Chinese video streaming service. IQiyi has the largest market share in China with 68% of adults had watched it in 2022 (Tencent Video is second at 66% of adults, source).
Baidu also has 10.3% of Ctrip (source).
In its own words, "Baidu is already a leading AI company with a strong Internet foundation. We are one of the very few companies in the world that offers a full AI stack, encompassing an infrastructure consists of AI chips, deep learning framework, core AI capabilities, such as natural language processing, knowledge graph, speech recognition, computer vision and augmented reality, as well as an open AI platform to facilitate wide application and use. We have put our leading AI capabilities into our products and services, as well as innovative use cases."
The founder of Baidu, Robin Li, is a top computer scientist in China. He is pretty much like Jeff Dean in Google. From Wikipedia, "the founder of Baidu Robin Li published his RankDex paper in 1997, a year before Larry Page's PageRank in 1998. And Larry was clearly aware of RankDex when he founded Google."
2023 segments breakdown (millions RMB):
2022 segments breakdown (millions RMB):
Non-gaap diluted earnings per ADS:
SWOT analysis
Strengths
Top leading technology in China including Search, Maps, AI, AI chips, self-driving
Largest market share in Search in China
Multiple consumer facing apps with hundred millions of users
Robin Li, the founder of Baidu, is a top computer scientist in China.
Weaknesses
Execution has been subpar compared with Alibaba, Tencent. Not to mention Tiktok, Pinduoduo, etc.
Opportunities
Its AI technology is leading in China, so it may benefit the most from LLM.
Its self-driving technology and Robotaxi are very promising in commercialization.
Threats
Chips ban affects Baidu's AI effort
China geopolitical risk
Its cloud service is inferior to Alibaba cloud, and maybe even to Tencent cloud and Huawei, at least in terms of market share. It may signal a very poor execution of the company.
References
https://ir.baidu.com/Baidu-Core
2023/12 https://www.statista.com/statistics/1212017/china-leading-map-apps-based-on-monthly-active-users/
Updates
2024/03/05 Valuation
Sum of the parts valuation:
Diluted shares outstanding: 2.837 billion shares, that is 355 million ADS
It has the following options value:
AI Cloud
Ernie AI
Apollo
Baidu has a geopolitical risk due to China, so similar to Alibaba, I would limit the position to less than 5%.
No comments:
Post a Comment