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Sector: Media and Telecommunications
Baidu
- Sector: Media and TelecommunicationsTechnology
- Sub Sector: Technology
- Country: China
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Fundamental View
AS OF 04 Mar 2026We maintain our Underperform recommendation on Baidu following its weak 4Q25 results. Revenues fell amid the continued contraction in online ads, while EBITDA margin fell YoY due to an increased revenue mix of the lower-margin AI cloud segment and weak monetization of its search engine; gross leverage further weakened and net cash narrowed. Baidu trades in-line to Asia A corp and 9 bp tighter than Asia A- corp which we view as rich; this is because we expect its debt metrics to remain weak compared to its historical levels over the next 12-24 months given the challenging outlook of its advertising segment and weak margins of its AI cloud segment. In our view, Baidu should be trading closer to A- corps. We also think Baidu is expensive compared to BABA and TENCNT.
Business Description
AS OF 04 Mar 2026- Founded in 2000, Baidu started out as a search engine business and began its development into artificial intelligent (AI) since 2010.
- Baidu general business is the main revenue driver of the company (79% of 4Q25 revenues); this includes its AI-powered businesses (34% of 4Q25 revenues) through AI cloud infrastructure (ie. enterprise cloud), AI applications (Baidu Wenku, Baidu Drive, automonous ride-hailing via Apollo Go), and AI-native marketing services; the remaining core revenues (45% of total) are derived from its legacy business and others which includes traditional advertising services across Search, Feed and other properties.
- iQiyi accounts for the remaining revenues of Baidu; iQIYI is an online video platform with a content library that includes licensed movies, television series, cartoons, and other programs; it generate revenues through online ads and membership subscription fees.
- Baidu launched ERNIE bot in Mar-23, a generative AI chatbot powered by ERNIE, Baidu's in-house foundation model.
- Baidu has a market capitalization of RMB 284.9 bn as of 4 March 2026.
Risk & Catalysts
AS OF 04 Mar 2026Any regulatory clampdowns abroad and domestically (e.g. potential US investment ban, antitrust rules, data security and personal information protection laws) may adversely affect the business of Baidu. The interpretation of Chinese laws and regulations involves some degree of uncertainty.
There are regulatory risks given the corporate structure which uses variable interest entities (VIEs) to circumvent China’s restrictions on foreign ownership of Internet Content Providers (ICPs).
Baidu has made significant investments into long-term AI-related projects, which may take time to turn profitable. A potential escalation of the US chip restriction could have a material negative impact its AI related business (ie. cloud, ernie bot, autonomous driving).
Intense competition in online ads segment may pressure topline and EBITDA margin.
Key Metric
AS OF 04 Mar 2026| RMB bn | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 29.7% | 28.5% | 25.0% | 22.5% | 26.0% |
| Debt/Total Equity | 42.2% | 39.8% | 33.4% | 29.0% | 35.1% |
| Debt/Total Assets | 24.1% | 23.4% | 20.8% | 18.5% | 21.6% |
| Gross Leverage | 3.3x | 2.8x | 2.2x | 2.0x | 3.2x |
| Interest Coverage | 8.2x | 11.4x | 12.1x | 13.8x | 10.9x |
| EBITDA Margin | 22.6% | 26.8% | 29.2% | 29.3% | 23.4% |
CreditSight View Comment
AS OF 27 Feb 2026We maintain our Underperform recommendation on Baidu following its weak 4Q25 results. Revenues fell amid the continued contraction in online ads, while EBITDA margin fell YoY due to an increased revenue mix of the lower-margin AI cloud segment and weak monetization of its search engine; gross leverage further weakened and net cash narrowed. Baidu trades in-line to Asia A corp and 9 bp tighter than Asia A- corp which we view as rich; this is because we expect its debt metrics to remain weak compared to its historical levels over the next 12-24 months given the challenging outlook of its advertising segment and weak margins of its AI cloud segment. In our view, Baidu should be trading closer to A- corps. We also think Baidu is expensive compared to BABA and TENCNT.
Recommendation Reviewed: February 27, 2026
Recommendation Changed: August 21, 2025
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Search topics about wealth insights and investments.PLDT
- Sector: Media and TelecommunicationsTechnologyTechnology Media and Telecommunications
- Sub Sector: Telecommunications
- Country: Philippines
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Fundamental View
AS OF 17 Nov 2025PLDT’s FY24 and 1H25 results were stable as expected; we see a modestly improving FY25 credit outlook aided by resilient EBITDA growth and residual tower sales, which could offset persisting high capex.
A potential stake sale of the data center business could drive further deleveraging.
While the spillover of a PHP 33 bn capex overrun to FY25 could weigh on free cash flows, we draw mild comfort that it was likely not due to fraud but rather a management misstep.
Business Description
AS OF 17 Nov 2025- PLDT is a leading telecom operator in the Philippines, competing alongside its main rival Globe Telecom in a predominant duopoly.
- PLDT provides 2G/3G/4G mobile, fixed-line, broadband, enterprise data, and other digital services to retail and corporate customers.
- PLDT operates through 2 main business segments – “Wireless Services” and “Fixed Line Services”.
- Its “Wireless” segment offers mobile voice, mobile SMS, mobile data and mobile broadband services to retail customers in the Philippines. These services are marketed under the “Smart Postpaid”, “Smart Prepaid”, "Sun Postpaid" and “TNT Prepaid” brands.
- Its “Fixed Line Services” segment provides fixed line voice, corporate data and home broadband services to retail and corporate customers in the Philippines.
- PLDT commercially launched 5G services on a small-scale basis in Jul-2020. It currently has over 3,000 5G sites nationwide.
- PLDT maintains dominant market shares in the mobile, fixed line voice, and the home broadband spaces.
- PLDT is backed by three established corporate groups, namely First Pacific (~15% stake), NTT Corporation (~12% stake) and JG Summit Holdings (~7% stake).
Risk & Catalysts
AS OF 17 Nov 2025Aggressive expansion by new entrant DITO over the next 2-4 years could chew away at PLDT’s market share and restrain recoveries in average revenues per user (ARPU).
PLDT incurs significant capex that has restrained improvements in its leverage metrics and free cash flows. This is worsened by a recent capex overrun that has induced mild corporate governance uncertainties (though these have eased in recent months).
Consistently high dividend payouts could worsen PLDT’s already negative free cash flows.
PLDT is exposed to $/PHP depreciation risks ($300 mn 2050 bond is fully unhedged).
Key Metric
AS OF 17 Nov 2025| PHP bn | FY22 | FY23 | FY24 | 9M24 | 9M25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 71.9% | 73.3% | 74.2% | 74.1% | 74.7% |
| Net Debt to Book Cap | 65.7% | 69.3% | 72.0% | 71.3% | 72.6% |
| Debt/Total Equity | 256.2% | 273.9% | 287.5% | 286.2% | 294.9% |
| Debt/Total Assets | 46.8% | 49.6% | 53.8% | 52.1% | 56.9% |
| Gross Leverage | 2.9x | 2.9x | 3.0x | 3.0x | 3.2x |
| Net Leverage | 2.7x | 2.8x | 2.9x | 2.9x | 3.1x |
| Interest Coverage | 7.4x | 6.5x | 6.1x | 6.2x | 5.5x |
| EBITDA Margin | 48.7% | 49.1% | 51.1% | 51.8% | 52.3% |
CreditSight View Comment
AS OF 12 Mar 2026We maintain our Market perform recommendation on PLDT. PLDT 2031 trades tight to Globe 2030, ICTSI 2031, Axiata 2030, and Bharti 2030, and we see room for it to widen 15-20 bp. PLDT 2050 also trades tight to other 2050 bonds in SSEA, including Reliance, Pertamina, and PLN. We are comfortable with PLDT’s sturdy credit profile aided by a resilient broadband business and falling capex. Governance fears have also eased post its capex overrun in end-2022. That said, we are watchful of strong competition in the mobile space due to DITO’s ramp up, persisting pricing pressure, and rising dividends. Proposed asset monetizations including data center stake sales are credit positive, though progress is seemingly elusive.
Recommendation Reviewed: March 12, 2026
Recommendation Changed: February 03, 2026
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Search topics about wealth insights and investments.JD.com
- Sector: Media and TelecommunicationsTechnology
- Sub Sector: Technology
- Country: China
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Fundamental View
AS OF 21 Aug 2025We maintain our M/P recommendation on JD post its weak 2Q25 results; topline growth was a strong beat, but EBITDA margin materially narrowed due to hefty spending for its food delivery business; FOCF also contracted and gross debt metrics weakened, but JD still retained a strong net cash position. JD trades largely in-line to Asia A- corp which we view as fair; while we expect JD’s gross debt metrics to temporarily weaken over 2H25 due to its hefty investments into food delivery, we do not expect downgrade risk for the credit given the strong performance of its core retail and logistic segments, and we expect JD to still maintain a strong net cash position over the 12 months. Amongst the A-rated China tech credits, we continue to prefer Alibaba and Tencent.
Business Description
AS OF 21 Aug 2025- JD is one of China's leading e-commerce and retail infrastructure service providers.
- JD has a large fulfillment infrastructure which includes over 1,600 warehouses operated by the company, and 2,000 cloud warehouses operated by third-party warehouse owner-operators under JD Logistics Open Warehouse Platform. Its warehouse network had an aggregate gross floor area of approximately over 32 mn square meters, as of 31 December 2024.
- JD has 3 operating segments, namely (1) JD Retail (82% of 2Q25 revenues), which includes JD Health and JD Industrials, and the segment mainly engages in online retail, online marketplace and marketing services in China; (2) JD Logistics (14%) which includes both internal and external logistic businesses; and (3) New businesses (4%) which consist of food delivery, Dada, JD Property, Jingxi and overseas businesses.
- JD had a market capitalization of RMB 325.1 bn as of 21 Aug 2025.
Risk & Catalysts
AS OF 21 Aug 2025While Chinese regulators have adopted a friendlier stance towards tech companies, any regulatory clampdowns may still adversely affect the business of JD (e.g. antitrust rules, data security & personal data protection laws).
Intensifying competition amongst Chinese eCommerce platforms with the entrance of new live-streaming/short-form video platforms and group buying discount platforms may result in slower topline growth and weaker EBITDA margin for JD as its increase its user/merchant incentives and promotional activities to defend its market share.
There are regulatory risks involving the use of variable interest entities (VIEs) to circumvent China’s restrictions on foreign ownership of Internet Content Providers (ICPs). Specifically, VIE transactions involving “change in control” will be subject to antitrust regulatory processes.
Key Metric
AS OF 21 Aug 2025| RMB mn | FY21 | FY22 | FY23 | FY24 | LTM 2Q25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 12.2% | 19.2% | 18.8% | 22.3% | 25.3% |
| Debt/Total Equity | 13.8% | 23.7% | 23.1% | 28.7% | 33.9% |
| Debt/Total Assets | 6.9% | 10.9% | 10.9% | 12.9% | 14.3% |
| Gross Leverage | 1.8x | 1.9x | 1.5x | 1.7x | 2.2x |
| Interest Coverage | 16.1x | 16.3x | 15.5x | 18.5x | 16.2x |
| EBITDA Margin | 2.0% | 3.3% | 4.1% | 4.6% | 3.6% |
CreditSight View Comment
AS OF 06 Mar 2026We maintain our Underperform recommendation on JD following its poor 4Q25 results. Topline growth decelerated on a high base for its home appliance/electronics segment, EBITDA turned negative due to hefty new business losses; FOCF fell YoY and debt metrics materially weakened. We expect JD’s debt metrics to improve in FY26 from a low base, but it remains weak compared to historical levels. JD trades 3/8 bp tighter than Asia A/A- corporates, ~10 bp tighter than Alibaba, and it is only 4 bp wider than Tencent; this is much tighter than average spread differential of 21 bp for A3 and A1 Asia $ bonds. We think JD’s spreads should be trading closer to Asia A- corporates; in addition, we see reduced rating headroom for JD with potential negative outlook revision by S&P and Moody’s
Recommendation Reviewed: March 06, 2026
Recommendation Changed: September 05, 2025
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