Baidu, China’s Google, likely to shine with quarterly results

PUBLISHED : Monday, 25 April, 2016, 7:13pm
UPDATED : Monday, 25 April, 2016, 7:13pm

Chinese online search giant Baidu is not expected to disappoint investors when the Nasdaq-listed company posts its first-quarter earnings later this week, according to analysts.

They forecast Baidu to show strong mobile traffic and online video revenue, as well as progress in its online-to-offline (O2O) activities, which offset its “moderating core search revenue growth” last quarter.

Beijing-based Baidu is the first of China’s dominant triumvirate of internet companies – including South China Morning Post owner Alibaba Group and Hong Kong-listed Tencent Holdings – to report their financial results in the three months to March 31.

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“We expect [Baidu’s] first-quarter revenue this year to come in at the high-end of its guidance range,” Jefferies equity analyst Karen Chan said in a report.

In February, Baidu estimated that it would generate total revenue of between 15.41 billion yuan and 15.97 billion yuan (HK$18.39 billion and HK$19.05 billion) in the first quarter. That range represented a 21.1 to 25.5 per cent year-on-year revenue increase, it said.

“We expect core search revenue to grow 18.8 per cent year on year, but decline 13.9 per cent quarter on quarter in the three months to March due to seasonality,” Chan said.

BNP Paribas analyst Ling Vey-sern said in a report that Baidu’s core search revenue had “slowed sharply to 27 per cent year on year in 2015 from 48 per cent year on year in 2014”.

Ling added that the result last year was in line with expectations.

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Baidu reported a 155 per cent increase in net profit last year to 33.66 billion yuan, from 13.19 billion yuan in 2014, on the back of solid online marketing revenue and subscriber growth.

Total revenue rose 35 per cent to 66.38 billion yuan from 2014.

Chairman and chief executive Robin Li Yanhong said 2015 was “a touchstone year for Baidu: we made significant progress in broadening our online marketing platform and further extending our reach into transactions services.”

The company said it recorded 1.05 million active online marketing customers last year, up 29 per cent from 2014. Revenue per online marketing customer last year reached 60,500 yuan, a nearly 2 per cent year-on-year increase.

Jefferies’ Chan said Baidu’s search business in the first quarter was buoyed by rising mobile traffic, “driven by continued 3G subscriber migration to 4G and improving network quality”.

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Chan pointed out that Baidu “extended its online video market leadership, particularly on mobile” as paying subscribers to its iQiyi service increased this past quarter.

“The recent airing of Korean TV drama Descendants of the Sun [on iQiyi] drew more than three million incremental paying subscribers, on top of its 10 million subscriber base at the end of last year,” Chan said. That drove up iQiyi’s contribution to around 30 per cent of Baidu’s total first-quarter revenue, she added.