The "eve of the explosion" of commercialization. Welcome to follow the WeChat subscription account of "Sina Technology": techsina
Wen/Zhangdao
Source: new entropy (ID: baoliaohui)
In this information rich era, it often requires great perseverance to understand the company, but for long-term investors, it is more necessary to ignore short-term noise.
Warren Buffett is such a rare investor. With patience and foresight, he naturally earned billions of dollars. His experience has already told the world that as long as the industry in which the investment target is located has development prospects and the valuation has investment space, he will firmly hold it.
The "skills" and "ways" of top investors are often the same. Zhang Lei, the founder and CEO of Hillhouse, wrote in the book Value: "Longevity is not only a methodology, but also a value. The flowing water does not compete for the first place, but the argument is endless.
In Zhang Lei's view, whether for enterprises or individuals, long-term doctrine is not only an inevitable path for Chinese enterprises to transform, but also a fundamental method for individuals to cultivate and realize their self value.
In China, the number of investment targets in the "hidden dragon in the abyss" tends to be small. How to find such investment opportunities can also start from the long-term perspective. It is very rare for companies to maintain their "difficult and correct" strategic focus for decades.
As a company with long-term investment in cloud, artificial intelligence, intelligent driving and other long cycle tracks, Baidu undoubtedly meets the above investment criteria.
Baidu's basic disk
On March 1, 2022, Baidu released its financial statements for the fourth quarter and the whole year of 2021 as of December 31.
The financial report shows that Baidu's revenue in the fourth quarter was 33.1 billion yuan, and the average market expectation was 32.2 billion yuan. The net profit attributable to Baidu (non US GAAP) reached 4.1 billion yuan, and the average market expectation was 2.9 billion yuan. Both revenue and net profit exceeded market expectations.
In 2021, Baidu's revenue will reach 124.5 billion yuan, up 16% year on year.
Li Yanhong, chairman and CEO of Baidu, said: "In 2021, Baidu delivered an answer sheet of steady growth, in which non advertising business grew strongly, especially smart cloud business grew rapidly. Baidu AI technology went deep into China's traditional industries and government service departments, helping thousands of industries to integrate innovation and improve efficiency."
In 2021, one of the key words of China's Internet will be connectivity. The interconnection effect will restart the vitality engine of China's Internet. During the quarter, connectivity provided long-term advantages. Baidu made progress in connectivity and cooperated with dozens of Internet platforms to develop small programs.
Benefiting from this, according to the financial report, Baidu's monthly App activity reached 622 million in December 2021, with a year-on-year growth of 14%. It is expected that Baidu will continue to benefit from a rich content ecology and an expanded closed-loop consumption scenario.
If connectivity is the prelude, high-quality development is the general trend. There is no doubt that China's economic development is shifting from factor driven to innovation driven.
At this stage, new traffic infrastructure is entering the "fast lane".
Previously, in 2019, the Outline of Building a Transport Powerful Country proposed to basically build a transport power by 2035. In February last year, the Central Committee of the Communist Party of China and the State Council issued the Outline of the National Comprehensive Three dimensional Transportation Network Plan. With such a forward-looking goal, the country's determination is not small.
The strategic support for the long-term development of the country can not be separated from the most essential underlying driving force, science and technology self-reliance. Scientific and technological innovation enterprises that conform to the characteristics of the times are extremely scarce.
As an early domestic enterprise in the field of automatic driving, Baidu Apollo has been promoting the development of automatic driving and intelligent transportation industry in China through technology empowerment.
The financial report shows that by the end of 2021, the number of cities covered by Baidu ACE Intelligent Transportation signed 10 million orders has soared from 14 a year ago to 35, making rapid progress.
In addition, driven by cloud computing and other AI businesses, Baidu's core revenue will grow by 21% year on year in 2021, and its non advertising business revenue will grow by 71% year on year, showing a very impressive performance.
It is easy to see that Baidu Smart Cloud plays an irreplaceable role in Baidu's quarterly financial report. In addition, the performance of Baidu Smart Travel is also very strong.
The financial report shows that the automatic driving travel service platform "Radish Run" provided about 213000 rides in the fourth quarter, almost doubling, reconfirming Baidu's leadership in the global automatic driving travel service market.
Another highlight of this quarter's financial report is that in 2021, Baidu's core R&D expenses will be 22.1 billion yuan, accounting for 23% of Baidu's core revenue.
In the past decade, Baidu's annual R&D investment accounted for more than 15% of its revenue. As an Internet technology company that constantly uses technology to consolidate its product base, Baidu attaches great importance to investment in technology research and development.
Taking AI as an example, Baidu launched its scientific research layout for AI as early as 2010, and its focus on technology paved the way for its long-term stable growth, as well as providing pre guarantee for the full commercialization of innovative business.
It can be seen that Baidu's long-term R&D investment has highlighted its advantages since 2016, and cutting-edge technologies such as Baidu Brain and Apollo autopilot platform have become Baidu's unique commercial advantages. As the commercialization prospect of cloud and intelligent driving becomes clearer, the value of this part of business is gradually released.
On the whole, according to the results delivered by the company itself, Baidu is in a favorable range of stable growth and accelerated commercialization.
Cloud and intelligent driving become a new curve
Baidu is divided into three core business lines as a whole, one is mature mobile ecological business, the other is fast developing intelligent cloud business, and the third is intelligent driving business of future hard technology. At this stage, cloud and intelligent driving have become Baidu's new valuation curve.
Let's start with intelligent cloud. In recent years, the proportion of non advertising business including Baidu's intelligent cloud revenue has gradually increased.
Today, the increasingly obvious trend is that Baidu Smart Cloud has become a new revenue growth engine.
This trend can be seen intuitively from the financial report data. In 2020, the cloud service revenue of Baidu's core business will be 9.2 billion yuan, with a year-on-year growth of 44%. In 2021, the development of intelligent cloud business will be accelerated.
Earlier, on December 9, Canalys released the third quarter report of 2021 on China's cloud computing market, which showed that the overall cloud computing market in China in the third quarter grew by 43% year on year. As one of the "four clouds in China's market", Baidu Smart Cloud's year-on-year growth was far higher than the industry average.
Although the current share of Baidu Smart Cloud is lower than that of top players, its cloud service is unique in the cloud computing market with AI as its feature. Today, when the overall cloud computing market tends to be homogeneous, Baidu Cloud is expected to take AI as the advantage of differentiated competition.
According to the Research Report on Chinese AI Cloud Service Market in 2021H1 released by IDC, Baidu's smart cloud AI public cloud service market has won the first place for five consecutive times. Segmentation: NLP has won the first place for four consecutive times, image and video has won the first place for four consecutive times, and human face recognition has won the first place for three consecutive times.
From this point of view, the unique competitive advantage of Baidu's intelligent cloud "cloud intelligence integration", relying on the underlying support in both "cloud" and "intelligence", makes the cloud business very imaginative in the future.
In addition to intelligent cloud, Baidu has also made a lot of achievements in the field of intelligent driving by virtue of its leading edge in AI technology, especially in the quarter when intelligent driving accelerated its commercialization.
Before dismantling Baidu's intelligent driving business, here is a simple conclusion based on induction.
Since the rapid development of the global Internet in the 1990s, there have been two smart terminals with epochal significance in the science and technology industry - PC and mobile phones.
The first generation of intelligent terminal PC, the biggest winner in the system software link is Microsoft, which has become the biggest entrance to PC; For the second generation smart terminal phones, the biggest winner in the system software link is Google, which has become the biggest entrance to mobile phones.
Nowadays, smart cars are regarded as the third generation of smart terminals by industry insiders, so who can be the biggest winner in the era of smart cars? Or, as a pioneer in the field of intelligent driving, can Baidu become the entrance to intelligent cars, namely Android in intelligent driving?
At this stage, Baidu's intelligent driving product matrix includes commercial solutions for automatic driving, "Radish Run", intelligent car brands and intelligent transportation.
At the Baidu AI developer conference at the end of December 2021, Baidu announced the latest progress of its intelligent driving business.
By the end of December 2021, Baidu's AVP has landed in Weima W6, GAC Ai'an VPlus and Great Wall WEY Mocha; ANP expects to achieve mass production and listing on Baidu Jidu Auto in 2023.
In addition, recently, some media learned that BYD selected Baidu as its intelligent driving supplier, and Baidu provided BYD with ANP intelligent driving products integrated with travel and parking and human-machine driving maps.
At this stage, with the technological innovation of the traditional automobile industry and the trend of "three modernizations" of automobiles, Baidu can achieve deep cooperation with domestic automobile manufacturers under this trend, which is quite imaginative.
"Radish Run" is a newly upgraded automated travel service platform launched by Baidu Apollo in August 2021, which can provide commercial operation and diversified value-added services to the public.
Recently, after Nanshan District, Shenzhen, Yangquan City officially issued two commercial licenses to Baidu's autonomous travel service platform "Radish Run", which marks that Baidu has achieved full coverage of services to Beijing, Shanghai, Guangzhou, Shenzhen and top tier cities, and its business layout is far ahead in China.
Considering the acceleration of its commercialization process, compared with Waymo, an overseas autonomous driving technology company, Baidu's "Turnip Run" is putting on a business story of late comers and first movers.
As for Jidu Auto, it is a smart car brand jointly established by Baidu and Geely.
In January this year, Chidu announced that it had completed a round A financing of nearly 400 million dollars, which was invested by two old shareholders, Baidu and Geely. The successful completion of the new round of financing undoubtedly helped Chidu press the accelerator button on the R&D and mass production of smart cars.
From these aspects, we can see Baidu's leading edge in the field of intelligent driving. In addition to Baidu's cutting-edge exploration in the field of intelligent transportation, back to the above issues, Baidu is likely to become the biggest winner in the era of intelligent vehicles.
"Value stock" to "growth stock"
In the secondary market, investors often divide stocks into growth type and value type.
The so-called value stock means that the company has good profit and development potential, but these are not reflected in the stock price, and its stock value is underestimated by the market.
Growth stocks, known as "hot stocks", are shares of companies whose earnings are expected to grow at a higher rate than the market average.
Benjamin Graham, the father of value investment, defined growth companies as: "growth stocks that have performed better than most stocks in the past few years, whose annual growth rate of earnings per share is higher than other ordinary stocks, and which may still perform better in the future."
In fact, there is no authoritative definition of the terms "value stock" and "growth stock".
However, investors often have a basic recognition of what stocks are classified into these two categories before there is an official list.
The most basic evaluation standard is financial data. Value stocks usually have the characteristics of low price earnings ratio (P/E) and price to book ratio (P/B). In fact, many companies alternate between value oriented and growth oriented, which is part of the business cycle.
There is no doubt that Baidu is now in the range of value stocks. However, just as you don't know how butterflies feather, changes are happening quietly.
At this stage, Baidu Mobile's ecological revenue has always maintained a healthy level, and its more imaginative prospects depend on advanced automatic driving technology and its cloud computing business. From the perspective of the accelerated commercialization of both, this transformation process is advancing at full speed.
First, let's look at the commercial scheme of automatic driving in the field of intelligent driving. Baidu expects to produce 1 million vehicles in the future 3-5 years, including Weima W6, Baidu's own Jidu vehicles, and third-party users of Apollo automatic driving platform such as Geely, Chery, GAC, Ford, etc.
According to the prediction of Western Securities, under the simple linear assumption (the actual sales data depends on the implementation progress of the cooperation with the vehicle manufacturer), Baidu ANP mass production vehicles will be sold in increasing quantities every year from 2022. It is estimated that the ANP sales will be about 16 billion yuan in 2026.
Similarly, Baidu's unmanned vehicle travel service platform "Radish Express", the company plans to expand "Radish Express" to 65 cities by 2025, and to 100 cities by 2030. In 2025, the service cost of Robotaxi will be lower than that of manual driving.
In the future, the final competition pattern of the automated driving solution market is expected to be relatively concentrated, and Baidu is expected to become one of the leaders in the track. From the perspective of different market share assumptions, it is estimated that the revenue scale of Baidu Robotaxi's operating services in 2025-2030 will be 85 billion to 250 billion.
Of course, in terms of cloud business, referring to Insight Consulting data, the potential market of intelligent cloud solution providers has increased from 700 million yuan in 2015 to 13.3 billion yuan in 2019, with a compound annual growth rate of 82.3%, and is expected to reach 113.7 billion yuan in 2025.
Considering the significant competitive advantage of Baidu's intelligent cloud "cloud intelligence integration", its customer volume will further expand and maintain a rapid growth momentum.
From these aspects, thanks to the stable cash flow generated by Baidu's main business and the acceleration of commercialization in emerging fields (cloud, artificial intelligence, intelligent driving, intelligent device systems, etc.), Baidu is actively transforming from a value company to a growth company.
For Baidu, it is precisely in the process of changing from "value stock" to "growth stock" that investors and companies win the dual victory of long-term principle under the background of noise elimination.
In general, from intelligent driving to cloud computing, Baidu has come to the "eve of a big explosion" of commercialization after passing through the "no man's land" of technological pioneer in the current cutting-edge AI application field.
reference material:
Western Securities "Leading AI Internet Platform, Apollo Ready"
(Statement: This article only represents the author's view, not Sina.com's position.)
