Internet & Tech

Driving ahead

Baidu readies its secondary listing in Hong Kong


On an Apollo mission: Robin Li

Apart from students of the Classics, mentions of the Greek god Apollo are more likely to prompt recollections of the American space programme. But in China Apollo is getting new billing as the brand that displaces humans from behind the wheel of a car rather than putting them on the Moon.

Apollo is the name for Baidu’s autonomous driving platform, which has claimed to be at the forefront of new driving technology since it was established in 2017. Last month the company rolled out its first mobility-as-a-service (MaaS) pilot in Guangzhou. This builds on the tech firm’s other Robotaxi taxi services, which first launched in Changsha in September 2019 and now includes offerings in Beijing and Changzhou too. As of mid-December, the taxis had made trips that had transported 210,000 passengers (although the rules still require that a safety driver sits in front).

However, the rollout planned for Guangzhou is in another league altogether. In addition to booking Robotaxis on their Apollo GO app or through Baidu Maps, customers now have access to automated shuttles (called Apolong) across parks. They can jump onto King Long Robobuses operating along fixed routes and they can call a New Species Vehicle (effectively a mobile vending machine) to deliver a drink or snack.

New Apollocops could also supersede Robocop in the popular imagination. “Dead or alive, you’re coming with me” was the calling card of the cyborg policeman unveiled by Hollywood in 1987. Now he has Chinese peers, albeit without the signature catchphrase and not quite as confrontational: the initial focus is unmanned police cars that patrol the streets of Guangdong’s capital.

As we wrote in WiC530, Baidu’s electric vehicle (EV) business has started to get the attention of financial analysts and equity market investors. Baidu’s shares are showing signs of life after lagging BAT peers Alibaba and Tencent for years. In fact, Baidu has been the star performer of the trio both year-to-date and on a 12-month basis, rising 25% and 173% respectively.

It’s the kind of momentum that should make a forthcoming share sale on the Hong Kong Stock Exchange (HKEx) a success, after Baidu won clearance from the bourse’s listing committee in early March, keeping the company on course to fulfil founder Robin Li’s dream of listing on a stock exchange in a Chinese market. Baidu will sell new stock comprising 9% of its outstanding shares in a secondary listing that could raise more than $3.5 billion, the Hong Kong Economic Times reported. Li has claimed that Baidu only sold shares in the US in the first place because it couldn’t list at home. Interest from companies like Baidu in joining a domestic bourse has only grown since the Trump administration began tightening controls over Chinese companies on the NYSE and Nasdaq.

Baidu is currently trading at around 25 times consensus forward earnings, towards the higher end of a 10 to 30 range since 2018. That is a premium to Google (22 times) but still a discount to Alibaba (28.5 times) and Tencent (34.5 times).

One notable change in how analysts have been looking at Baidu is the new value being ascribed to its cloud and EV businesses.

Advertising sales are still the dominant driver and non-marketing revenues only accounted for 18% of overall sales in the fourth quarter, led by cloud (up 67% year-on-year).

Analysts also believe that the EV business contributed less than 5% of Baidu’s total revenues last year, or about Rmb5 billion ($770 million).

However, that’s set to change fast. Chinese broker CICC thinks the sales figures could grow to Rmb45 billion by 2025 and Rmb145 billion by 2030. Baidu is the “ideal bet to place on the surging smart driving industry,” it claims. Baidu’s roster of products in autonomous mobility includes Apollo Navigation Pilot (ANP) and Apollo Valet Parking (AVP). Customers are taking note. For example, WM Motor is one of the more recent clients for AVP (a level 4 autonomous driving solution), which will be fitted in the carmaker’s new W6 SUV.

Baidu has partnered with 10 auto brands. And it has struck a major deal with Geely to make cars for other brands and to develop one together (see WiC530). Last week, the two formally registered their new company, Jidu Auto.

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