BIDU: Advertising Headwinds Mount. Guidance Cut.

Tencent Retains Financial Leadership in Chinese Internet with Strong 4Q15 Results

Tencent's Multiple Platforms Deliver Key Advantages

Differentiated global TMT & Internet Research

New Street Research Insights

New Street Research

Research is provided by our team of experienced analysts. Our work is idea driven, based on independence of thought, sector expertise, and firmly focused on fundamentals and valuation of telecoms and internet names globally. New Street is headquartered in London with offices in New York, Singapore and Australia. 

New Street Research is an independent, partner-owned, research firm specialising in equity and debt research. Our equity research embraces the following sectors:

Pan European Telecom Services and Cable
US Telecoms, Cable, Satellite and Towers
Global Emerging Market Telecoms
Japan Telecoms
Asian Internet
Pan European Healthcare
US Healthcare
Japanese Healthcare

We also provide debt research on:
Pan European Telecom Services and Cable

Equity Bottom-Up

We have had (and continue to have) a preference for <a href="https://www.smartkarma.com/entities/26" target="_blank" data-smartkarma-citation="entities:26">Tencent Holdings Ltd</a> (Tencent) over <a href="https://www.smartkarma.com/entities/179" target="_blank" data-smartkarma-citation="entities:179">Baidu Inc Spon Adr</a> (BIDU). The main reason has been the faster path to monetization but BIDU has faced a number of additional issues recently which have led to a modest reduction in forecasts. We remain at Neutral on the stock.New regulations on pay-for-performance search add to headwinds for revenue growth whilst structural changes for loss-making businesses increase the near-term tax burden. The use of annual contracts for key accounts may minimize regulatory change this year but make renewals at higher rates more difficult from FY17 onwards.We have made a series of changes to our forecasts following 1Q16 results, new regulations following the hospital issue and after more detail released on non-core businesses. Our target price has been reduced by around 3.5% to $188.

We have had (and continue to have) a preference for Tencent Holdings Ltd (Tencent) over Baidu Inc Spon Adr (BIDU). The main reason has been the faster path to monetization but BIDU has faced a number of additional issues recently which have led to a modest reduction in forecasts. We remain at Neutral on the stock.New regulations on pay-for-performance search add to headwinds for revenue growth whilst structural changes for loss-making businesses increase the near-term tax burden. The use of annual contracts for key accounts may minimize regulatory change this year but make renewals at higher rates more difficult from FY17 onwards.We have made a series of changes to our forecasts following 1Q16 results, new regulations following the hospital issue and after more detail released on non-core businesses. Our target price has been reduced by around 3.5% to $188.

Baidu Faces Headwinds from Regulatory Issues and Taxation