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Bide your time on Baidu

Media - 9 December 2019

This latest note by Ingham Analytics is hot on the heels of the Prosus note last week (“It’s all in Tencent”) which also had a China tech theme. In coverage of Baidu, among other overseas listed companies, Ingham Analytics gives investors an informed view of companies not listed on the JSE, but which South Africans have access to through various platforms. Ingham Analytics have deep knowledge on assets across several foreign markets, so their view is well-worth taking note of. They point out that several China-facing tech stocks can be bought on US or Hong Kong exchanges. Baidu, Alibaba, JD.com and NetEase can be purchased on Nasdaq whilst Chinese education stocks like TAL and New Oriental are listed on the NYSE. Tencent of course is listed on the Hang Seng. Ingham Analytics point to a bifurcation between different sub-categories of China tech. Over twelve months, Baidu is down 35%, Alibaba is up 33% and Tencent is up 9%. JD.com is up 60% over twelve months but that is after falling by 60% from the 2018 high in January. So, is Baidu a buy then? Ingham Analytics discuss latest Chinese internet developments with some companies doing better than others. They do say that for Baidu artificial intelligence is a high growth market but is this enough to propel earnings? iQIYI, the online video platform that is majority owned by Baidu, is also mentioned. An updated sum-of-the-parts valuation is given. This is a more than $40 billion market cap company so worth a read if you are interested in Chinese tech investment options.

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