Baidu, Inc. provides Chinese and Japanese language Internet search services. Its search services enable users to find relevant information online, including Web pages, news, images, multimedia files, and blogs through the links provided on its Websites. The company also offers online community-based products and entertainment platforms; an instant messaging service; and a consumer-oriented e-commerce platform. In addition, it designs and delivers online marketing services and auction-based P4P services that enable its customers to reach users who search for information related to their products or services. The company serves online marketing customers consisting of small and medium sized enterprises, large domestic corporations, and Chinese divisions or subsidiaries of multinational corporations primarily operating in the medical, machinery, education, franchising, electronic products, e-commerce, ticketing, tourism, information technology, consumer products, real estate, entertainment, and financial services industries. It sells its online marketing services directly, as well as through its distribution network. The company was formerly known as Baidu.com, Inc. and changed its name to Baidu, Inc. in December 2008. Baidu, Inc. was founded in 2000 and is headquartered in Beijing, the People’s Republic of China
Analysis
BIDU is single best stock for Investors to take part in the China's Super hot economy. There are many stocks in this sector like SOHU, NTES, SINA which are all doing very well in recent few years.
BIDU is filling the need of 1/6 of the world population which is not served by Google. The middle class in China is twice bigger than the entire population of United States.
If Google lessons are true, more youngsters use the search engine on the typical day than any other age group. With Google out of the way and Yahoo/MSFT being sidelined in mainland china. Bidu is poised for APPLE like growth.
Lets see the fundamentals of Baidu Company and valuation based on its recent earnings.
| Valuation Measures |
|---|
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| 2010-12* | 2009-12 | 2008-12 | ||||
| Income Statement | ||||||
| Revenue | 7,915 | 4,448 | 3,198 | |||
| Operating Income | 3,959 | 1,605 | 1,097 | |||
| Net Income | 3,525 | 1,485 | 1,048 | |||
| Earnings Per Share | 10.10 | 4.27 | 3.02 | |||
| Shares Outstanding | 349 | 348 | 347 | |||
| Balance Sheet | ||||||
| Current Assets | 8,782 | 4,843 | 2,852 | |||
| Non Current Assets | 2,266 | 1,314 | 1,086 | |||
| Total Assets | 11,048 | 6,157 | 3,938 | |||
| Current Liabilities | 2,552 | 1,400 | 849 | |||
| Total Liabilities | 2,643 | 1,404 | 849 | |||
| Stockholders' Equity | 8,406 | 4,753 | 3,089 | |||
| Cash Flow | ||||||
| Cash From Operations | — | 2,279 | 1,746 | |||
| Capital Expenditures | — | -450 | -477 | |||
| Free Cash Flow | — | 1,829 | 1,269 | |||
You can see that the EPS has tripled in last four years.. The stock price did Quadruple in past four years, with the rest of the Market...With a projected annual growth of 75% YOY (year over Year). This stock will be $400 in next 5 years. Recently the BIDU jumped almost 25% post earning seasons. But the stock got beaten up in last few sessions due to Middle east turmoil. But one that should be clear to investors is that Oil price increase will not affect the revenue of a search engine company like BIDU or GOOGLE. Any dip in this stock is a great buying oppurtunity.
Five Year Shows that the stock is well above its support lines
BIDU - Weekly Candlesticks: "
via StockCharts.com
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With tremendous growth and doubling EPS every year with limited threat from Google/Yahoo/MSFT BIDU is a real winner long term
My Target price for Baidu is $160 by end of the Year 2012.
The best entry points are below
First Buypoint if the Market shows signs of turnaround : $109
Second Buypoint if S&P cracks the 50 day average : $101
Third buy Point if Market crashed another 1000 points: $97
Please comment ,it helps us to see different viewpoints.
Happy Investing
