Baidu, registered in the Caymen Islands, operates its websites in China through consolidated affiliated Chinese entities with whom it has contractual relationships. Fitch expects Baidu to maintain strong financial flexibility with sound profitability, ample liquidity and prudent leverage over the medium term.įitch notes that Chinese law restricts foreign equity ownership in internet, online advertising and employment agency companies in China. The company also has managed its relationship with the government and other regulatory bodies well.īaidu has generated free cash flow (FCF)/sales of around 40% for the period of 2008 to 2011 and continued to maintain a net cash position as of end-September 2012. The company’s brand, intellectual property and market share present high barriers to entry for potential competitors. The ratings also benefit from strong profitability and balance sheet reflecting its ability to monetise internet traffic, through a proven performance-based, online marketing service to half a million advertising customers targeting hundreds of millions of Chinese internet users.įitch believes that technological innovation plus high levels of brand recognition and consumer satisfaction have enabled Baidu consistently to increase its market share in a rapidly growing market. The ratings reflect Baidu’s dominance in the internet search market in China with an over 85% traffic market share. A full rating breakdown is provided below. The agency has also assigned Baidu’s proposed USD senior notes an expected rating of ‘A(EXP)’. SEOUL/SYDNEY/SINGAPORE, November 06 (Fitch) Fitch Ratings has assigned Baidu Inc.’s (Baidu) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) of ‘A’.
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