China Internet Google (China) Moves its Services to HK, What’s Next? $GOOG

Baidu should expand its leadership: We believe Baidu, which owns over 60% of the paid search market
share in China, will be a key beneficiary of this development. On our estimates, Baidu’s search market
share could increase to 80-85% by capturing 70-80% of Google (China)’s paid search revenues, which accounts
for low-30% of total market, which would lead to 35-40% revenues upside for Baidu in 2010 and reduce our
2010e P/E for the stock from mid-60x to mid-40x.



China Internet