Review of the Baidu company
If anyone doesn’t know, Baidu is the largest Chinese search engine and the 4th largest in the world.
The share price at the time of writing this post is $103.6, there are 4 stocks in the portfolio, a share of ~6.95%.
The price drawdown from the highs is ~64%. Current P/E and PEG (125 and 3.4) are not particularly indicative, since in the 1st and 3rd quarters of 2019, baidu’s profit was negative due to increased personnel costs, investments, and the purchase of iQiyi (analogous to Netflix). In general, due to high competition, the company is now more focused on investment than on growth.
Forecast for 3 years: revenue growth by 10-15% annually, achieving a total profit of 20 billion by the end of 2022. RMB Conservative forecast for earnings per share at the end of 2022 is $6 per share.
Forecast of share price at the end of 2022 = $165 per share = upside to the current price +70% for 3 years in dollars or ~19% per annum. As always, the goal is indicative, not a take profit, and in any case I will monitor the dynamics of the company's development and its indicators. I plan to reduce the share in the portfolio to 4-5%.
Graphic:
1) Dynamics of the share price 2005-2020
2) Dynamics of the company’s profit and revenue 2017-2019, 2020-2022 - forecast values
3) Dynamics of earnings per share 2018-2019, 2020-2022 - forecast values
Ideas
March 31, 2020