gaia10

I have written a investment report on YY. I would love to hear your comments and feedback. https://snowballvalue.wordpress.com/2019/03/01/yy-growth-at-a-cheap-price/

Hey SnarkyPuppy, Could you share your source on management's Bigo revenue and profit projection? Btw, I agree with you on most of these points.

Why sell if you think: "Going forward, Baidu is likely going to compound its search business near the industry growth rate of 20%-30% year over year while unlocking value for its other businesses and inventing new technology." Should the search business be worth the same multiple as Google's search business? Consumption (driver of ad spend) in China is rising much faster than everywhere else in the world and internet penetration is still only ~50%. The reason I am selling is because I see other interesting opportunities within the technology industry in China that can achieve a higher IRR. While Baidu's search revenue can compound near 20% yoy, there are other firms trading near Baidu's multiples with higher upside and greater moat. Baidu could theoretically trade at a higher valuation than Google if growth is the only factor in consideration. However, in terms of quality, Baidu does not have the moat nor the competitive advantage that Google enjoys. For example, Google has 7 products with more than 1 billion MAU whereas Baidu only has its popular search engine with more than 500 mil MAU. Balancing the quality and growth aspect of Baidu, in my view, Baidu should trade within range of Google (trading quality for growth). Which Chinese tech companies do you like best out of curiosity? I agree Google is a higher quality business, but having your market growing 20%/yr is a nice tailwind... And Google itself may be undervalued. On an absolute basis even at the current price I could see a 20%+ IRR on BIDU for a while. In the process of studying Baidu and the advertising industry in China, I found Tencent to be the most interesting advertising play/ technology play in China. Although it might look like Tencent is trading at 50xPE, if you stripe out the stakes it has in other companies and consider its untapped advertising "real estate", it is trading at a reasonable price. I will write it up on my blog soon, but it will take some time as it has many moving parts. I agree that Baidu is very interesting and would love to take it look at it once it becomes more attractive on a valuation basis. However, right now, I think some of the growth is being factored in and I just don't think 20%yoy growth is that attractive (in my opinion) if you consider the risks with mobile search competition (Baidu has lower market share in mobile than desktop), potential future cash burn, reliance on one single product etc. With the current valuation, I don't think I am provided with the same downside protection as last year.

Why sell if you think: "Going forward, Baidu is likely going to compound its search business near the industry growth rate of 20%-30% year over year while unlocking value for its other businesses and inventing new technology." Should the search business be worth the same multiple as Google's search business? Consumption (driver of ad spend) in China is rising much faster than everywhere else in the world and internet penetration is still only ~50%. The reason I am selling is because I see other interesting opportunities within the technology industry in China that can achieve a higher IRR. While Baidu's search revenue can compound near 20% yoy, there are other firms trading near Baidu's multiples with higher upside and greater moat. Baidu could theoretically trade at a higher valuation than Google if growth is the only factor in consideration. However, in terms of quality, Baidu does not have the moat nor the competitive advantage that Google enjoys. For example, Google has 7 products with more than 1 billion MAU whereas Baidu only has its popular search engine with more than 500 mil MAU. Balancing the quality and growth aspect of Baidu, in my view, Baidu should trade within range of Google (trading quality for growth).

I wrote an update on Baidu. Would love to hear your comments. https://snowballvalue.wordpress.com/2017/09/27/update-on-baidu/ PS. Thank you Foreign Tuffett for pointing out the Ctrip share count change and the currency risk. I have adjusted my valuation and taken note of the currency risk.

I have written a investment report on Baidu. Would love to hear your comments. https://snowballvalue.wordpress.com/