Haitong International expects Baidu's core adjusted operating profit in the first quarter to decline by 23% year-on-year

Haitong International published a report predicting that Baidu (09888.HK) will have a core business revenue of RMB 24.9 billion in the first quarter, a year-on-year decrease of 2% or a quarter-on-quarter decrease of 5%. Among them, core advertising revenue is expected to decline by 20% year-on-year or 15% quarter-on-quarter; AI cloud business is expected to grow by 45% year-on-year. The adjusted operating profit is estimated to be RMB 3.8 billion, a year-on-year decrease of 23%, corresponding to an operating profit margin of 15%.

In terms of full-year outlook, the firm expects Baidu's core business revenue for the fiscal year 2026 to be RMB 104.5 billion, a year-on-year increase of 2%; non-GAAP operating profit is expected to be RMB 15.3 billion, corresponding to an operating profit margin of 15%, an increase of 1.4 percentage points year-on-year.

The report states that Baidu indicated that the IPO progress of Kunlun Core is on track. The firm believes that a successful listing of Kunlun Core will be an important catalyst for Baidu's stock price. It maintains a target price of USD 188 for Baidu's US stock (BIDU.US), noting that the current stock price does not yet reflect its net cash of USD 21.8 billion and the valuation of Robotaxi, maintaining an "outperform" rating