International rating agency Moodie (Moody) today announced that Baidu (Nasdaq:BIDU) reiterated the A3 issuer and senior unsecured debt rating, but the rating outlook from the positive down to stable". Moodie, vice president, senior analyst Cai Hui (Choi Lina) said: "cut the rating outlook is designed to reflect the next 12 months to 18 months of sluggish revenue growth expected. Revenue prospects are mainly affected by the recent medical advertising events."
Cai Hui also said: affected by the expected revenue growth in the doldrums, Baidu credit rating in the next 12 months to upgrade, and beyond the current A3 rating is very small."
Moodie expects Baidu in 2016 and 2017 revenue growth will fall from 15% to 17%, while in 2015 the revenue rose to 35%. In addition, EBITDA (profit before interest rate depreciation and amortization) growth will also slow down, is expected to reach 24 billion yuan to 28 billion yuan, while in 2015 was 21 billion yuan.
The above is expected to have been included in the Baidu peel off to bring profit margins to upgrade. Last year, Baidu reached an agreement with Ctrip, where the shares held by the company (class a class a common stock and 11 million class B common stock) replacement of 11 million common shares of ctrip.
In addition, Moodie also expects that by the end of 2016, Baidu's total debt may be increased to 45 billion U.S. dollars, to support its business development. As of the end of 2015, Baidu's total debt of 42 billion yuan.
Therefore, the next 12 months, Baidu's debt /EBITDA ratio is 1.7 to 1.8 times, far below the 2 times by the end of 2015. Therefore, a higher rating can not be supported.
In short, Moodie believes that the Wei Zexi incident has a negative impact on Baidu's reputation and revenue, but the impact is limited. Moreover, Baidu has said it will increase the intensity of the audit of medical advertising.
Needs to be pointed out is that A3 for Moody's investment rating of the 7. Unlike AAA or abbreviated 3a, A3 and the highest AAA difference six level distance.