Saturday, February 18, 2012

Baidu Profits Soar to Record Heights: EPS +9% QoQ & +77% YoY

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Baidu Profits Soar to Record Heights: EPS +9% QoQ & +77% YoY

* Unless otherwise noted, currency amounts below are in Chinese Renminbi (RMB) *

Baidu Summary Q4 2011 Baidu reported yet another record-breaking quarter. New record highs were reported for total revenues, operating income, net income, earnings per share, and cash flow per share. Gross, operating, and net margins continue very strong. Return on assets continue at an amazing 40.45%. As expected, the current Q4 exceeded the prior Q3, but the next quarter, Q1, is projected to dip slightly. The expectations continue sky-high for Baidu in the world's largest Internet market. Financial position is strong and liquid. Robin Li, Chairman and CEO, commented, "Over the course of 2011, we made great progress on the Baidu Open Data and Open Application platforms, executed effectively on our landing page strategy, and rolled out several new initiatives, including our personalized homepage and the Baidu Yi mobile platform." The currency translation at December 31, 2011 utilized by Baidu was RMB6.2939 to US$1.00.

Baidu Income Statement Q4 2011 Baidu financial performance was yet another record-breaking quarter with record total revenues RMB4.47 billion, record net income RMB2.05 billion, and record earnings per share RMB5.87 ADS. From the prior record setting quarter Q3 2011, QoQ, these were +7%, +9%, and +9%, respectively. From the prior year Q4 2010, YoY, these were +83%, +77%, and +77%, respectively. Gross and operating margins dipped QoQ and YoY to 72% and 51%. Net margin increased QoQ but decreased YoY to 46%. The operating expense ratio increased slightly to 21%, but continues at a very profitable.

Baidu Balance Sheet Q4 2011 Total assets increased an astounding +111% YoY to a record high RMB23.34 billion. That is double the prior year quarter! The capital to assets ratio is a solid 66%, but is below historical levels. Baidu is liquid with a current ratio of 68%, which is also below historical levels.  Baidu has over RMB14.2 billion in cash, cash equivalents, and short-term investments. Return on assets of 40.45% continues at astronomical levels, but has the 2 recent quarters due to a significant increase in goodwill and intangible assets.

Baidu Outlook Q1 2012 The Baidu outlook for Q1 2012 is strong, but not record-breaking, total revenues of RMB4.195 billion to RMB4.330 billion, which would be the second best quarter ever reported. If the gross and net margins can be sustained at the current very high levels, the next quarter looks outstanding with a dip QoQ but impressive growth YoY. Baidu states, "Baidu currently expects to generate total revenues in an amount ranging from RMB4.195 billion ($666.5 million) to RMB4.330 billion ($688.0 million) for the first quarter of 2012, representing a 72.2% to 77.7% year-over-year increase. This forecast reflects Baidu's current and preliminary view, which is subject to change.

Osprey Flyer Estimate Q1 2012 Based on the above Baidu outlook, this would conservatively equate to an earnings per share of RMB5.39 to RMB5.57 per ADS or $0.85 to $0.88 per diluted share.

Baidu Financial Performance by the Quarters Baidu Earnings Per Share Current Earnings per Share of RMB5.87 increased +9% QoQ and +77% YoY and is another record high. Earnings per Share have increased 7 of the past 8 quarters. For comparison, the chart average is RMB2.98, almost half the current quarter.


Baidu Cash Flow Per Share Current Cash Flow per Share of RMB96.03 increased an incredible +91% QoQ and +90% YoY to an all-time high. Cash Flow per share has increased 7 of the past 10 quarters. For comparison, the chart average CFS is RMB38.81, well below the current quarter.


Baidu Total Revenues, Operating Income, and Net Income Overall, these are amazing results for the current and recent quarters. Current Total Revenues of RMB4.47 billion is another record high, increased +7% QoQ and +83% YoY, and have increased 7 of the past 8 quarters. Current Operating Income of RMB2.297 billion is a record high and has increased 7 of the past 8 quarters. Current Net Income of RMB2.05 billion is a record high, increased an impressive +9% QoQ and +77% YoY, and has increased 7 of the past 8 quarters.


Baidu Gross Margin, Operating Margin, and Net Margin Overall, Baidu has been reporting incredible margins in recent quarters. Current Gross Margin of 72.27% dipped again QoQ and YoY, but is above the chart average of 69.03%. Gross Margin has now been above 70% for 7 consecutive quarters. Current Operating Margin of 51.35% dipped again QoQ and now YoY, but is above the chart average of 44.50%. Operating Margin has been above 50% for 6 of the past 7 quarters. That one-quarter below, Q1 2011, was 49.04%. Current Net Margin of 45.63% increased QoQ, dipped YoY, and has been above 40% for 7 consecutive quarters. The chart average is 39.90%.


Baidu Return on Assets ROA continues at astronomical levels, but is downtrending. Current Return on Assets of +40.45% dipped QoQ and YoY. ROA has decreased 2 consecutive quarters, after increasing 6 consecutive quarters. The ROA chart average is +39.36%. Total assets have increased significantly due to an increase in goodwill and intangible assets the past 2 quarters. This has reduced the ROA.


Baidu Growth Rates YoY Baidu has been a high growth technology company and stock. Current Total Revenues Growth YoY of +82.55% continues the sensational growth and is about the chart average of +82.79%. Current Earnings per Share Growth YoY of +76.81% also continues the fantastic growth. EPS Growth YoY is "slowing", decreasing 4 consecutive quarters and below the unbelievable chart average of +110.48%.


Baidu Traffic Acquisition Costs Current Traffic Acquisition Costs of 7.91% is the 5th consecutive quarter in the 8.00% area. TAC decreased slightly QoQ and YoY. The TAC chart average is 9.77%.


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