Everyone Loves China’s Baidu
Apr. 30 2011 - 8:13 am blogs.forbes.com
It helps to have friends in high places, and that has surely helped the Chinese government’s favorite search engine, Baidu. Not only did it help pressure Baidu’s biggest competitor, Google, out of the market last year, but the company has become a must-have stock for anyone interested in China’s consumer story, even if it is trading at more than 50x forward earnings.
Baidu’s Chief Executive Officer Robin Li, aka China’s richest man according to Forbes, told analysts during a Hong Kong conference call that Baidu has had its share of growing pains lately, but has plenty of growth left in it.
“Search just became the most popular application for Chinese internet users, and there is still a lot of growth to expect for many years down the road,” Bloomberg reported Li as saying during the call.
On Wednesday, Baidu reported a 123% increase in first-quarter net income to $164.5 million. Sales beat analysts’ estimates due to higher ad charges, helping first-quarter revenue rise 88.3% to $372 million.
“We still love Baidu,” says Peter Newell, Senior Portfolio Advisor for Vontobel Asset Management. They own Baidu in two of their international and emerging market growth funds. “With Google gone, the competition is next to nothing. They beat analysts estimates seven quarters in a row now. This is a long term growth story and this is why people are willing to pay top dollar for Baidu.” |
