Goldman Sachs released its research report today

Goldman Sachs released its research report today, Nasdaq:bidu Baidu's second-quarter earnings and maintaining a "neutral" rating on Baidu's shares.

The following is the full report:

Baidu reported Better-than-expected results in the second quarter, as well as the average forecast by Bloomberg analysts. Total revenue of 7.561 billion yuan, the year-on-year growth of 39%, the chain growth of 27%, higher than expected and the average analyst expected high 1% and 2% respectively. Non-US general accounting standards for ads per share earnings of 1.26 U.S. dollars, maintained flat, the chain growth of 27%, and the average analyst expectations, higher than the expected 4%. Non-US general accounting standards operating profits grew 4% year-on-year, up 29% per cent, in line with Goldman's expectations. Baidu forecast that the third quarter total revenue of 8.73 billion to 8.96 billion yuan, the middle point year-on-year growth of 42%, higher than expected and the average analyst expected high 3% and 6% respectively.

Analysis：

1 Baidu forecast, the third quarter revenue will increase 42% year-on-year, is accelerating trend. We anticipate that Baidu's revenue growth will grow faster as the commercialization of the mobile business strengthens (the mobile business contributes 10% to Baidu's second-quarter revenue), as well as the acquisition of PPS video business for Archie Arts.

2 The second-quarter revenue growth was mainly attributable to the growth of SME accounts, which boosted the total number of clients by 33%, up from 28% in the first quarter. Revenue per customer rose 4% Year-on-year, below 9% in the first quarter.

3 Gross Profit margin of 65.2%, down 7.2% year-on-year, up 0.3%, and Goldman's expectations are consistent. The main cost items include: a) the flow of the cost accounted for 11.6% of the revenue, the chain Rose 1.4%, up 3.3% year-on-year, which is mainly due to contextual advertising and hao123 impact. b bandwidth costs accounted for 6% of revenue, 0.4% higher than our forecast, reflecting Baidu's investment in cloud computing strategy and video content. c The cost of content accounts for 2% of revenue, up from 1.6% in the first quarter.

4 Operating profit margin of 39.5%, down 13.1% year-on-year, the chain growth of 0.6%, in line with Goldman Sachs expectations. Higher sales management and administrative costs are offset by lower research and development costs and steady growth in gross profits.

5) Share wages rose 55% year-on-year, rising faster than the same period of revenue and profit growth.

Goldman Sachs will release Baidu's latest performance forecasts after its earnings conference call.