Hong Kong Stock Market Review: Baidu falls below net asset value again

Earlier, the "Radish Run" order surge caused a significant increase in Baidu's stock price, but it has now fallen to a low for the year, mainly due to the company struggling to maintain positive growth. Baidu's Q1 revenue growth rate was only 1% year-on-year, and Q2 not only did not improve, but even slightly declined compared to the same period last year. Even excluding the drag from iQIYI, Baidu's core business growth rate was only 1%, the same as Q1. Net profit also declined, mainly impacted by iQIYI, while core net profit performance was better. Under non-GAAP, net profit in Q2 increased by 9% year-on-year and 6% quarter-on-quarter, compared to 26% growth in Q1. Specifically, core advertising business revenue decreased by 2% year-on-year to 19.2 billion. Although the company emphasized that currently 18% of search results are provided by AI, it did not bring much help, mainly due to increasing competition. For example, recently, Douyin launched an independent app "Douyin Search" for media content, and in the future, more vertical search engines are expected to emerge, which will have a greater impact on Baidu. Non-advertising business grew by 10% year-on-year, mainly driven by AI-empowered cloud business. Q2 intelligent cloud revenue increased by 14% year-on-year, with AI revenue accounting for 9%, and management expects the business to continue to maintain good growth momentum. As for autonomous driving, Q2 autonomous driving orders were approximately 899,000, a 26% year-on-year increase, but specific numbers are still undisclosed. Based on Didi's average order price of 24.5 yuan, the revenue scale is about 22 million yuan, accounting for less than 1% of the group's total. Optimistically, Radish Run has begun to provide 100% fully autonomous driving services in Wuhan, marking an important step forward. However, the current weak macroeconomic environment has affected core advertising revenue, and with increasing competition in the future, this may not be easily compensated for by Radish Run or Wenxin Yiyuan. Additionally, Baidu repurchased $230 million/$300 million worth of shares in Q1/Q2 respectively, with $3.8 billion remaining by the end of 2025. However, the financial report shows that the weighted average number of basic common shares issued in Q2 decreased from 2,801 million in the same period last year to 2,800 million shares, with minimal changes. The growth is full of uncertainties, and the return is insufficient, which is currently not well received in the Hong Kong stock market