China's No. 1 Search Engine Baidu Holds Huge Growth Potential

From MSN Money: Own a piece of China's Google wannabe

"If you missed out on Google, take heart. This summer, you may get a second chance to own an Internet search giant, since China's version of Google is going public in about a month. For investors who get in early and think long term, China's most popular search engine, known as Baidu, has a chance to produce healthy gains. Whether its shares will match Google's 200% gain is another question."

Baidu's basics
"Launched in 2000, Baidu turned profitable just over a year ago. It pulled in just $5.5 million in revenue in the first quarter of 2005 and $13.4 million in 2004. But it has the potential for rapid growth."

"Baidu unabashedly imitates Google. Its site -- http://www.baidu.com/ -- has the same clean, no-frills appearance. Its marketing tag line borrows from the now-common use of “Google” as a verb in English. Baidu's own ads say: “Got a question, Baidu it."

"The company runs over 820,000 message boards in a service called “Baidu Post Bar.” Baidu’s search box is also on more than 76,000 Web sites in China, in a network it calls “Baidu Union.” Click-through traffic from this network generates about a fourth of Baidu’s revenue. And many observers claim that Baidu does a better job with Chinese language search than Google.

And like Google, Baidu is a huge hit. It’s the leading search engine and second-most-used Web site in China, according to iResearch. It’s also the sixth most popular Web site in the world, according to Alexa, a company that tracks Internet usage."

Cheap, for now
"Baidu is slated to start trading for $19 to $21 on Nasdaq under the ticker BIDU, in an IPO underwritten by Goldman Sachs, Credit Suisse First Boston and Piper Jaffray.In that range, Baidu will come public at about 35 times 2006 earnings, says Au of Hamon Asset Management. Assuming the stock does not pop too much on the IPO, that will make it look downright cheap compared with Google. Google has a forward price-earnings ratio of 45, but Baidu has faster growth."

Read more:
Baidu Files for Nasdaq IPO
Google Interest In Baidu Buyout?
Google Steps up Fight for the China Market
Approval of Google's Plans to Expand Mainland China Operations
Chinese search engine market seen as gold mine