Baidu.com, Inc. (ADR) (BIDU)

JackLampka (61.49) Submitted: 5/08/07 4:03 PM : Start Price: $124.25 BIDU Score: 113.28

I’m tired to hear “China” whenever there is a discussion about emerging markets since this viewpoint ignores the other growing markets outside of the BRIC countries like Turkey or South Africa. However, I must admit that due to its size, China does present an investment opportunity over the next several years.

According to McKinsey, the share of the middle and affluent classes among Chinese urban households is supposed to grow from 23% in 2005 to 77% in 2015. In absolute numbers, the number of Chinese urban households with income classified as middle or affluent class is supposed to grow from 43 million in 2005 to 215 million in 2015. So, this number will quintuple over ten years.

Where will these middle and affluent classes spend their money? Maybe on national and international travel arranged online through Ctrip.com (CTRP), including travel to Olympics in 2008? And where will they spend their time online on the newly purchased PCs with Internet access that they can now afford? Maybe using Chinese portals like Sina.com (SINA) or search engines like Baidu.com (BIDU)? I answer “yes” to all these questions and put money on these companies.

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