Founded in 2000 as a search engine platform, BAIDU inc. was an early adopter of artificial intelligence to make content discovery on the internet easier.
The main investor concern (I think) is the poor historic track record on execution. Over the years, they’ve been early with several new activities, only to lose out to the competition later on.
Do you think anything is different this time around?
Baidu Inc. has pursued numerous avenues quite early, and I believe the capital allocation sucks when considering historical performance. But the company is cheap nevertheless, holds substantial amounts of excess cash with no clear strategy for deployment, which, in my opinion, makes it appear like a tech cigar butt company.
It trades for <1x EV/EBITA and 0.3x P/E when excluding net cash and LT investment from MCAP - crazy cheap. Investors may never see most of that cash though; buybacks barely offset SBC.
I linked to your piece in my Monday links collection post: Emerging Market Links + The Week Ahead (November 24, 2024) - China bank loan misappropriation worries, more Adani troubles (US indictments), Macau rising, Javier Milei interview, strong USD to hit EM bonds, EM stock picks & the week ahead for emerging markets.
The main investor concern (I think) is the poor historic track record on execution. Over the years, they’ve been early with several new activities, only to lose out to the competition later on.
Do you think anything is different this time around?
Baidu Inc. has pursued numerous avenues quite early, and I believe the capital allocation sucks when considering historical performance. But the company is cheap nevertheless, holds substantial amounts of excess cash with no clear strategy for deployment, which, in my opinion, makes it appear like a tech cigar butt company.
It trades for <1x EV/EBITA and 0.3x P/E when excluding net cash and LT investment from MCAP - crazy cheap. Investors may never see most of that cash though; buybacks barely offset SBC.
We see it, therefore it's all about being patient I would say
I linked to your piece in my Monday links collection post: Emerging Market Links + The Week Ahead (November 24, 2024) - China bank loan misappropriation worries, more Adani troubles (US indictments), Macau rising, Javier Milei interview, strong USD to hit EM bonds, EM stock picks & the week ahead for emerging markets.
https://emergingmarketskeptic.substack.com/p/emerging-markets-week-november-24-2024
Highly appreciated. Thank you.