On March 4, a research report from Daiwa projected that the initial public offering (IPO) valuation of Kunlunxin, a subsidiary of Baidu (09888.HK), is poised to surpass that of its industry counterparts. This expectation is underpinned by Kunlunxin's impressive revenue scale and robust profitability. Presently, the lion's share of Kunlunxin's revenue is derived from external demand, with prominent clients such as Tencent and a major telecommunications operator contributing significantly.

The company's management has expressed confidence that chip capacity constraints will not pose a short-term threat, as Kunlunxin has secured an adequate supply to sustain its growth trajectory over the forthcoming two years. Daiwa has reaffirmed its 'buy' recommendation for Baidu, setting a target price of HK$175. Additionally, the firm has retained its profit projections for Baidu for both the current and subsequent years. Notably, recent developments, including the specifics of Kunlunxin's listing and the 2026 dividend distribution plan, are anticipated to act as catalysts for the company's stock performance.