Wium Malan, CFA

Global Emerging Market Equities

Propitious Research

Equity Bottom-Up

<ul>
<li>Following several years of sustained revenue share loss, Search’s digital advertising revenue market share has stabilised, having seemingly retained its core advertising customers.</li>
<li>With China’s economic growth recovery, Baidu is perfectly positioned to accelerate its core marketing revenue growth, which is also a high-margin operation.</li>
<li>Baidu is set up for significant group margin expansion as the higher-margin core marketing business returns to positive annualised growth and it continues to expand AI Cloud margins.</li>
</ul>

Baptista Research

Independent research on the U.S. markets

<ul><li>This is our first report on Chinese internet behemoth, Baidu.</li><li>The company’s operating loss and margin year over year and quarter over quarter for AI Cloud improved.</li><li>Their new AI businesses, like AI Cloud and Intelligent Driving, are in line with China's national ambitions and digital innovation.</li></ul>

Sumeet Singh

Head of Research, IPOs & Placements

Aequitas Research

IPOs and Placements coverage across Asia Pacific

Event-Driven

<ul>
<li>PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US listed China companies.</li>
<li>The Hong Kong visit was on the back of the 26th Aug 2022 announcement by PCAOB and CSRC that they had entered into an agreement with US authorities for access.</li>
<li>In this note, we'll talk about the latest developments, possible outcomes and implications.</li>
</ul>

<p>Over the past two weeks, there have been two significant negative catalytic events (SEC moved forward on the road to a potential US delisting and missed margin calls by Archegos Capital Management created a forced seller) which has placed significant pressure on the Baidu share price, listed in the US <a href="https://www.smartkarma.com/entities/baidu-inc" target="_blank" data-smartkarma-citation="entities:179:1" rel="noopener">Baidu (BIDU US)</a> and Hong Kong <a href="https://www.smartkarma.com/entities/baidu-inc-a55ca720-5968-48f0-8194-ac94390d065c" target="_blank" data-smartkarma-citation="entities:32212:1" rel="noopener">Baidu (9888 HK)</a>.  </p>
<p>In this insight, I analyse the impact of recent share price movements on Baidu’s valuation and what that implies for the Core Search and Non-marketing Core operations. </p>

Equity Capital Markets

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<p>On 24th Mar 2021, Securities Exchange Commission (SEC) issued Amendments, Seeks Public Comment on Holding Foreign Companies Accountable Act. On the back of this, large China ADRs fell by 7.5% on average. </p>
<p>We have covered various aspects of this topic before in our prior note, links to which are below. In this note, I'll talk about the SEC updates.</p>
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<p>In our previous notes:</p>
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<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-deep-dive-yin-and-yang" target="_blank" rel="noopener">China ADRs Secondary Listing Deep-Dive: Yin and Yang,</a> published in Feb 2020,  we looked at the background and rules around undertaking a secondary listing in Hong Kong and then came up with a short-list of companies that might undertake a secondary listing. </li>
<li>
<a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-covid-19-has-increased-the-tension-but-narrowed-the-short-list" target="_blank" rel="noopener">In China ADRs Secondary Listing: COVID-19 Has Increased the Tension but Narrowed the Short List</a> published in May 2020, we looked at the recent developments and provided an revised short-list</li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-holding-foreign-companies-accountable-act-i-m-coming-home" target="_blank" rel="noopener">China ADRs Secondary Listing - Holding Foreign Companies Accountable Act - I’m Coming Home</a>, published in May 2020, we spoke about the implication of the act which had made its way through the senate.</li>
<li>In <a href="https://www.smartkarma.com/insights/china-adrs-secondary-listing-pipeline-looks-rich-have-three-years-to-move" target="_blank" rel="noopener">China ADRs Secondary Listing - Pipeline Looks Rich, Have Three Years to Move</a>, published in Feb 2021 we looked at the ADR pipeline and spoke about the updates from the Holding Foreign Companies Accountable Act becoming law and the updates at Hong Kong end as well. </li>
</ul>
</div>

China

Baidu, Inc. operates an Internet search engine. The Company offers algorithmic search, enterprise search, news, MP3, and image searches, voice assistance, online storage, and navigation services. Baidu serves clients globally.

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Baidu - 9888 HK

Baidu: Undervalued Cyclical Revenue Growth Acceleration and Margin Expansion Story

In this insight, we analyse Baidu’s search query and digital advertising revenue market share trends, revenue growth outlook, margin expansion...

Wium Malan, CFA

Baidu: Initiation of Coverage – Market Position & Key Drivers

This is our first report on Chinese internet behemoth, Baidu. The company’s operating loss and margin year over year and quarter over quarter for...

Baptista Research

China ADRs Delisting - Friday Could Be Judgment Day for over US$800bn Mcap of Stocks

PCAOB officials concluded their Hong Kong visit last month and PCAOB is due to announce its annual judgment on whether it had adequate access to US...

Sumeet Singh

Baidu: Attractive Short Term Entry Point Following SEC Statement and Block Sales

In this insight, I analyse the impact of recent share price movements on Baidu’s valuation and what that implies for the Core Search and Non...

Wium Malan, CFA

China ADRs - SEC Notice - Instead of Three, Probably Have Four Years till 2025 - Correction Overdone

On 24th Mar 2021, SEC issued Amendments, Seeks Public Comment on Holding Foreign Companies Accountable Act. On the back of this, large China ADRs...

Sumeet Singh

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