The secret of Baidu's prospectus: Baidu's three-tier growth engine

Date：2021/3/18

On March 17, 2021, Baidu (stock code: 9888.HK) announced that the final offer price for the international offering and the Hong Kong public offering is HK$252 per share. The total proceeds from the global offering (before underwriting fees and offering fees) are expected to be approximately It was 23.94 billion.

This means that Baidu’s listing is close at hand-with the approval of the Hong Kong Stock Exchange, Baidu is expected to start trading on the main board of the Stock Exchange on March 23, 2021, with the stock code 9888.

Public information shows that starting from March 12, 2021, investors will subscribe through the brokerage mobile app on weekends and holidays. Baidu has subscribed for HK$42.76 billion before listing, an oversubscription of 29.5 times.

Key figures in Baidu's prospectus: revenue of 107.1 billion yuan and net profit accounted for 21%

Investment institutions have recognized Baidu, obviously based on the judgment of Baidu's investment value-after more than 20 years of development, Baidu has performed well in terms of long-term growth and profitability.

In terms of the number of users, as of December 31, 2020, a total of 544 million users used Baidu's products through Baijia accounts, smart programs, and hosted pages. Baidu is still China's largest search and information flow application platform.

From the perspective of revenue in the past three years, Baidu's revenue is still growing:

According to Baidu's prospectus, from 2018, 2019 and 2020, Baidu's total revenue was 102.3 billion yuan, 107.4 billion yuan, and 107.1 billion yuan.

From the perspective of net profit, Baidu's operating profit margin and net profit income percentage have also increased significantly:

According to Baidu's prospectus, from 2018, 2019 and 2020, the net profit attributable to Baidu will be 27.6 billion yuan, 2.1 billion yuan and 22.5 billion yuan, respectively, and its operating profit margin will increase from 6% in 2019 to 2020. The percentage of net profit income has changed from 2% in 2019 to 21% in 2020.

From an investment perspective, Baidu's revenue and operating profit margins are still online among Internet companies.

In order to maintain sustained growth, Baidu has also invested a large amount of expenses in research and development:

According to data from Baidu’s prospectus, as of December 31, 2020, Baidu’s R&D investment in the same period was RMB 19.5 billion, accounting for 18% of its total revenue. In terms of core business, Baidu’s core business revenue was RMB 78.7 billion. The investment is 16.8 billion yuan, accounting for 21% of Baidu's core business revenue.

According to the related report of CZ Consulting, in 2025, the total potential market (TAM) of China's knowledge and information-based Internet platform and non-marketing business is expected to be 342 billion yuan and 4,134 billion yuan, respectively. From 2019 to 2025, its annual compound growth will be The rates are 12% and 36.5% respectively.