BIDU: Search Business in Mobile Drives Growth; Investing in Nuomi May Lead to the Change in Financial Reporting; Maintain BUY Rating

  • BIDU: Search Business in Mobile Drives Growth; Investing in Nuomi May Lead to the Change in Financial Reporting; Maintain BUY Rating

BIDU will report 2Q15 results on Monday, July 27th after the close of the market followed by an 8pm EST conference call. We are expecting the company to report at least in line 2Q15 results, driven by its core search business, particularly strong mobile search. We believe its strength in mobile search can continue. For other businesses such as Nuomi, we believe its newly committed investment is likely to result in the rapid growth in GMVs as well as registered mobile users. As such, we maintain our Buy rating on the stock. In addition, we believe it makes sense for BIDU to provide a separate P&L for its search and other businesses that are in the stage of heavy investing including iQiyi and Nuomi. If the company does so, BIDU can benefit from a potentially new valuation method such as sum-of-the-parts.

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