BEIJING: Chinese Internet search giant Baidu blew past earnings estimates on Thursday, sending its US-listed shares sharply higher in after-hours trading as investors cheered strong growth in its advertising business.
The firm, which has had to bounce back from a bruising medical advertising scandal in 2016, said it was now taking extra measures to clean up content on its platforms.
Baidu’s stock climbed 5.5 percent to $252 in late trading after marketing revenue grew 31 percent to 20.9 billion yuan ($3.30 billion), its fastest quarterly rate in over two years. Net profit rose 23.4 percent versus forecasts of 19.5 percent.
Baidu said it now expects second-quarter revenues of between 24.91 billion yuan and 26.19 billion yuan, indicating a 19.3-25.4 percent rise versus estimates of a 15.9 percent climb according to Thomson Reuters.
The search firm’s news feed received an unexpected bump in the first quarter due to a crackdown by Chinese Internet regulators on low-brow content, which saw several competing apps targeted during a key client-acquisition period.
Jinri Toutiao, one of China’s most popular news feed apps and a key Baidu rival, is among the apps to have been punished by censors this year. The news feed platform was temporarily removed from local app stores earlier this month.
“This is a one-off, but the timing is quite interesting. Baidu in its marketing can now assure clients that at least on the feed side it has safer content,” said Pacific Epoch analyst Raymond Feng, adding it made the firm “a more reliable choice.”
Analysts said the early year bump boded well for the rest of 2018, as advertisers tended to sign year-long contracts.
During a conference call with analysts on Friday, Chief Executive Robin Li said the company has employed artificial intelligence technology to target click-bait and inappropriate content. Baidu removed 20.2 billion malicious web pages in 2017.
The helping hand from censors is in stark contrast to Baidu’s woes two years ago, when regulators cracked down on its advertising practices, gutting its marketing client base and bringing its revenue growth to a grinding halt.
The company has since sold or withdrawn from a number of businesses to focus on autonomous driving, AI and its news feed product, regaining momentum and investor confidence.
Baidu’s total revenue rose about 24 percent to 20.91 billion yuan in the three months to March 31, its slowest rate in three quarters despite topping analyst estimates.
The positive results also reflect lower-than-expected research and development expenses, which have sky-rocketed since Baidu’s pivot to AI due to steep costs hiring top talent.
Content costs linked to Baidu’s newly listed entertainment subsidiary iQiyi Inc. are also expected to squeeze its margins for the foreseeable future, amid stiff competition in online content from rival Tencent Holdings Ltd.
Excluding one-time items, Baidu reported earnings of 16.30 yuan per American depositary share, above expectations of 10.57 yuan.
Baidu’s net income was also boosted by a new accounting standard that requires companies to report the value of their investments in private companies.
China’s Baidu beats forecasts as it sidesteps censors, boosts ad sales
China’s Baidu beats forecasts as it sidesteps censors, boosts ad sales
- Baidu said it now expects second-quarter revenues of between 24.91 billion yuan and 26.19 billion yuan
- Baidu’s total revenue rose about 24 percent to 20.91 billion yuan in the three months to March 31
European gas prices soar almost 50% as Iran conflict halts Qatar LNG output
- Analysts warn prolonged disruption could push prices higher
- Some shipments of oil, LNG through Strait of Hormuz suspended
- Benchmark Asian LNG price up almost 39 percent
LONDON: Benchmark Dutch and British wholesale gas prices soared by almost 50 percent on Monday, after major liquefied natural gas exporter Qatar Energy said it had halted production due to attacks in the Middle East.
Qatar, soon to cement its role as the world’s second largest LNG exporter after the US, plays a major role in balancing both Asian and European markets’ demand of LNG.
Most tanker owners, oil majors and trading houses have suspended crude oil, fuel and liquefied natural gas shipments via the Strait of Hormuz, trade sources said, after Tehran warned ships against moving through the waterway.
Europe has increased imports of LNG over the past few years as it seeks to phase out Russian gas following Russia’s invasion of Ukraine.
Around 20 percent of the world’s LNG transits through the Strait of Hormuz and a prolonged suspension or full closure would increase global competition for other sources of the gas, driving up prices internationally.
“Disruptions to LNG flows would reignite competition between Asia and Europe for available cargoes,” said Massimo Di Odoardo, vice president, gas and LNG research at Wood Mackenzie.
The Dutch front-month contract at the TTF hub, seen as a benchmark price for Europe, was up €14.56 at €46.52 per megawatt hour, or around $15.92/mmBtu, by 12:55 p.m. GMT, ICE data showed.
Prices were already some 25 percent higher earlier in the day but extended gains after QatarEnergy’s production halt.
Benchmark Asian LNG prices jumped almost 39 percent on Monday morning with the S&P Global Energy Japan-Korea-Marker, widely used as an Asian LNG benchmark, at $15.068 per million British thermal units, Platts data showed.
“If LNG/gas markets start to price in an extended period of losses to Qatari LNG supply, TTF could potentially spike to 80-100 euros/MWh ($28-35/mmBtu),” Warren Patterson, head of commodities strategy at ING, said. The British April contract was up 40.83 pence at 119.40 pence per therm, ICE data showed.
Europe is also relying on LNG imports to help fill its gas storage sites which have been depleted over the winter and are currently around 30 percent full, the latest data from Gas Infrastructure Europe showed. In the European carbon market, the benchmark contract was down €1.10 at €69.17 a tonne
