Baidu debuts Hong Kong secondary listing

GUANGZHOU, China – Shares of Baidu rose just under 1% when the company’s Hong Kong debut opened on Tuesday.

The Chinese tech giant, already listed in the United States, raised $ 3.1 billion on the Hong Kong secondary listing. Stocks reduced these gains during morning trading.

Unlike initial public offerings, secondary listings may not be greeted with massive rallies on day one, as the company’s shares are already trading on another exchange.

Listing in Hong Kong is a big time for Baidu, China’s biggest search engine. The company had a few rough years starting in mid-2018 and lagged behind rivals such as Alibaba and Tencent. Baidu failed to act quickly as Chinese users flocked to mobile search and a tough advertising market hurt the company.

But a turnaround, led by CEO Robin Li, focused on investors’ beliefs that the tech giant is a leader in artificial intelligence and autonomous driving with the aim of diversifying its revenue beyond The advertisement. And it seems to be paying off.

In mid-May 2018, Baidu’s U.S.-listed shares closed at $ 284.07 per share, a record high at the time. But the stock then fell more than 70% to a low of $ 83.62 in March 2020 amid the stock market crash. It was the lowest close since April 2013.

But since the March 2020 low, stocks have risen more than 200%. Baidu shares hit an all-time high of $ 354.82 in February.

“I think electric vehicles (EVs) are part of the story. At the same time, cloud computing, the integration of AI, these are all areas in which Baidu has invested very heavily since 2014 and we are starting everything just seeing the results of this work, ”Brendan Ahern, chief investment officer at KraneShares, told“ Squawk Box Asia ”on Tuesday.

Baidu has an autonomous driving system called Apollo which can be sold to car manufacturers. The company has launched an autonomous electric vehicle business in partnership with Chinese automaker Geely. Baidu is also testing robotaxis in cities, including Beijing. And last month, the company launched a smart transportation project in southern China’s Guangzhou city, its largest yet.

James Lee, Internet analyst in the US and China at Mizuho Securities, has a price target of $ 350 on Baidu’s US-listed stocks, 31% higher than Monday’s closing price on Wall Street. . He said the autonomous driving business could be valued at $ 40 billion and that the Chinese government will continue to support the industry with favorable policies. Lee also said he expects Baidu’s advertising business to continue to gain momentum in the first quarter of this year.

“We like the fundamentals of the company and continue to expect Baidu shares to outperform the market,” Lee told Street Signs Asia on Tuesday.

Meanwhile, Baidu is looking to further diversify its revenue streams. The company has raised funds for its Kunlun artificial intelligence semiconductor unit, valued at $ 2 billion.