Comprehensive Analysis of the Impact of Kunlunxin's Spin-off Listing on Baidu Shareholders' Value

According to the latest announcement, Kunlunxin (Beijing) Technology Co., Ltd., a subsidiary of Baidu, formally submitted an IPO application form (Form A1) to the Hong Kong Stock Exchange on

, applying for listing on the Main Board of the Hong Kong Stock Exchange [1]. Currently, Kunlunxin is a of Baidu and will remain a subsidiary after the spin-off is completed [1].

Item	Details
Baidu’s Shareholding Ratio	59.45% [1]
Latest Valuation	Approximately RMB 21 billion (about USD 2.97 billion) [1]
Latest Financing Round	Completed in July 2025 [1]
Registered Capital Change	Increased from approximately 21.28 million to 400 million, a growth rate of about 1780% [1]

• Baidu (China) Co., Ltd. (Controlling Shareholder)
• General Technology High-end Equipment Industry Equity Investment
• BYD (002594)
• Shanghe Momentum Fund, Shan Zheng Investment, Guoxin Capital, etc. [1]

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: After the spin-off news was announced, Baidu (09888.HK) shares to HK$138.3, with 4.151 million shares traded, involving HK$560 million [3]. This reflects the market’s recognition of the spin-off value.

:

• JPMorgan predicts Kunlunxin’s revenue will surge from
  approximately RMB 1.3 billion in 2025 to RMB 8.3 billion in 2026
  , a growth rate of
  sixfold
  [1]
• If estimated at the average Price-to-Sales Ratio (PS) of
  10x
  for tech stocks, the valuation is expected to exceed
  RMB 80 billion
  [1]
• Calculated based on Baidu’s 59.45% shareholding, the corresponding value is approximately
  RMB 47.5 billion
• Compared to the current valuation of RMB 21 billion, there is
  more than 100% upside potential

Baidu clearly stated in the announcement that the proposed spin-off is beneficial to both the company and Kunlunxin in terms of business and is in the overall interests of shareholders [1][2]:

• More comprehensively reflect Kunlunxin’s value based on its own advantages
• Improve operational and financial transparency
• Allow investors to clearly distinguish between Kunlunxin and the retained group, and independently evaluate their performance and potential

• Kunlunxin’s AI chip business will attract investor groups focused on general AI computing chips and related software and hardware system businesses
• Different from Baidu’s diversified business model, it helps to obtain higher valuation multiples

• Improve Kunlunxin’s image among customers, suppliers, and potential strategic partners
• Enhance the position in negotiations and争取 more business
• The retained group can benefit from Kunlunxin’s growth through its shareholding in Kunlunxin

• Kunlunxin can directly and independently access the equity and debt capital markets
• The retained group can allocate financial resources more effectively
• Provide continuous funding support for AI chip R&D

• More directly link the responsibilities and accountability of the management of both the company and Kunlunxin to operational and financial performance
• Strengthen management focus and corporate governance

---

: The valuation indicators of China’s AI chip industry are . Taking Cambricon, Moore Thread, and Muxi Semiconductor as examples, although their combined revenue in the first three quarters was only , their market value reached trillions of RMB [5].

: Valuations far exceeding the company’s financial fundamentals are a common phenomenon among listed AI chip companies. This is because:

• AI computing power is the “new oil”
  : Computing power chips are the foundation of the entire AI industry chain, providing “food” and “foundation” for all中下游 innovations [5]
• Pricing future value in advance
  : The investment market generally believes that Nvidia’s present is the future of China’s three major computing power giants [5]
• National Strategic Positioning
  : Computing power chips are a core industry related to the country’s right to speak in the global technology pattern [5]

• Domestic Substitution Dividend
  : It is expected that by 2027, the localization rate of China’s AI chip market will increase significantly from
  17% in 2023 to 55%
  [5]
• Explosive Revenue Growth
  : JPMorgan predicts a sixfold revenue growth to RMB 8.3 billion in 2026 [1]
• Strong Policy Support
  : The Ministry of Industry and Information Technology and other departments have clearly proposed to strengthen AI chip research and development efforts [5]

• Technological Ecosystem Breakthrough
  : Bypass CUDA hegemony and build its own software ecosystem
• Application Scenario Expansion
  : Expand from data centers to autonomous driving, industrial intelligence, etc.
• Clustered Solution
  : Make up for the gap in single-card computing power through super node solutions

• Strategic Positioning Value
  : Occupy an irreplaceable position in the AI industry chain
• Global Competitive Position
  : Become an important participant in the global AI chip market

Company	Valuation Status	Market Performance
Cambricon	Market value once exceeded RMB 600 billion , surpassing Kweichow Moutai to become the “stock king” [5]	Revenue grew by 2386.38% in the first three quarters of 2025, with net profit of RMB 1.605 billion [6]
Moore Thread	Market value once exceeded RMB 400 billion [5]	Shares rose by more than fourfold on the first day of listing [4]
Muxi Semiconductor	Market value is approximately RMB 332 billion [5]	Opened with a surge of 568.83% on the first day of listing [5]
Biren Technology	Has passed the Hong Kong Stock Exchange hearing and is sprinting for the “first GPU stock” in Hong Kong [4]	Revenue of RMB 337 million in 2024 [4]

: AI chip companies listed on the Science and Technology Innovation Board are generally given a PS valuation [5]. If Kunlunxin’s 2026 revenue reaches RMB 8.3 billion, with a , the valuation can reach .

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• China’s intelligent computing power scale growth will
  exceed 40%
  in 2025 [6]
• China’s overall high-end AI chip market size is expected to grow
  more than 60%
  in 2026 [7]
• The share of domestic AI chips is expected to increase from the current low level to
  about 50%
  [7]

• WSTS predicts that the global semiconductor market size will reach
  USD 975.46 billion
  in 2026, a year-on-year increase of 26.3% [7]
• Approaching the
  USD 1 trillion
  mark [7]

• Huawei Ascend
  : Has advantages in the inference side and has achieved large-scale commercialization
• Cambricon
  : A domestic pioneer in cloud AI chips, achieving profitability for three consecutive quarters in 2025 [6]
• Moore Thread, Muxi Semiconductor, Biren Technology, Iluvatar CoreX
  : All established between 2015 and 2020, with 2024 revenue between RMB 40 million and 740 million, but market share is less than 1% [4]

1. Backed by Baidu’s Ecosystem
   : Has a large number of application scenarios such as Baidu Search, autonomous driving, and intelligent cloud
2. Deep Technical Accumulation
   : Relying on Baidu’s years of AI chip R&D experience
3. Strong Capital Strength
   : Supported by strategic investors such as Baidu and BYD
4. Diversified Customers
   : Products are applied in multiple fields such as data centers, cloud computing, and autonomous driving [1]

• High Customer Concentration
  : Domestic GPU manufacturers generally have customer concentration issues, with the top five customers accounting for more than 70% of revenue [4]
• Fierce Market Competition
  : Multiple manufacturers are competing for limited domestic substitution market share
• Nvidia H200 Approved for Entry into China
  : Adds new variables to the computing power localization narrative [4]

• Technical Gap
  : In the field of ultra-large-scale model training, domestic chips still have a gap with the international leading level [4]
• Ecosystem Construction
  : Requires a lot of resources to build software ecosystems and developer communities
• Profitability
  : Many GPU manufacturers are still in a loss state and have not yet achieved large-scale profitability [4]

---

To assess the impact of spin-off on shareholder value, mainly from the following dimensions:

• Before spin-off: Kunlunxin’s value is implied in Baidu’s overall valuation and is difficult to identify separately
• After spin-off: Holding value is clearly visible and can be directly calculated through the shareholding ratio
• Value Unlocking Effect
  : The market valuation of independent assets is usually higher than that of businesses within the group

• Spin-off allows Kunlunxin to finance independently, reducing reliance on the parent company’s funds
• Baidu can concentrate more resources on core businesses (search, autonomous driving, etc.)
• Capital Efficiency Improvement
  : Each business segment can develop at its own pace

• Kunlunxin can independently carry out strategic cooperation, mergers and acquisitions, and other capital operations
• Baidu still maintains control and shares in Kunlunxin’s growth dividends
• Risk Isolation
  : Reduce the impact of fluctuations in a single business on the whole

For high-growth technology enterprises like Kunlunxin, multiple valuation methods are applicable:

• Price-to-Sales Ratio (PS)
  : Suitable for high-growth enterprises that have not yet made profits
• Comparable Company Method
  : Reference the valuation multiples of listed AI chip companies
• Applicable Scenario
  : AI chip companies on the Science and Technology Innovation Board are generally given a 10-20x PS [5]

• Based on discounted future cash flows
• Need to make assumptions about growth rate and discount rate
• High Uncertainty
  : The AI chip industry changes rapidly

• Reference the price of recent financing transactions
• Kunlunxin’s latest valuation is about RMB 21 billion (July 2025) [1]
• Need to Consider
  : Liquidity premium after listing

Based on JPMorgan’s forecast (2026 revenue of RMB 8.3 billion), conduct PS sensitivity analysis:

PS Multiple	Valuation (RMB 100 Million)	Baidu’s Holding Value (RMB 100 Million, 59.45%)	Growth Rate Compared to Current Valuation
8x	664	395	88%
10x	830	493	135%
12x	996	592	182%
15x	1245	740	252%

:

• Achievement of revenue growth targets
• Market sentiment and valuation level at the time of listing
• Promotion of domestic substitution policies
• Changes in competitive pattern

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• The spin-off news has driven the stock price up by more than 5% [3]
• Short-term fluctuations may be affected by market sentiment and the overall trend of Hong Kong stocks
• It is recommended to pay attention to the progress of listing approval and market reaction

• If Kunlunxin successfully lists and meets market expectations, the valuation is expected to increase to over RMB 80 billion, and Baidu’s holding value will be significantly增厚
• Pay attention to Kunlunxin’s performance fulfillment, especially the progress of achieving the 2026 revenue target (RMB 8.3 billion)
• It is recommended to allocate actively, but need to control positions to prevent volatility risks

• Spin-off helps Baidu focus on core businesses and improve overall operational efficiency
• As a strategic asset, the long-term value of AI chips depends on technological breakthroughs and commercialization
• It is recommended to hold for the long term and share in the growth dividends of the AI industry

• Kunlunxin’s performance fails to meet expectations, affecting valuation
• Intensified competition in the AI chip market, putting pressure on profit margins
• Fast technology iteration, risk of falling behind

• Fluctuations in the Hong Kong stock market affect valuation
• Valuation correction risk of tech stocks
• Uncertainty in the progress of spin-off listing approval

• Intensified Sino-US technological frictions
• Changes in the support intensity of domestic substitution policies
• Adjustments to regulatory policies

For Kunlunxin to achieve high valuation, it needs:

1. Technological Breakthrough
   : Reach or approach the international leading level in specific scenarios
2. Commercialization
   : Achieve large-scale revenue and profit
3. Ecosystem Construction
   : Build a complete software stack and developer community
4. Strategic Cooperation
   : Establish in-depth cooperation with cloud vendors and Internet companies
5. Policy Support
   : Continue to benefit from domestic substitution policies

---

The impact of Kunlunxin’s spin-off listing on Baidu shareholders’ value is

, mainly reflected in:

• Current valuation is RMB 21 billion. If it successfully lists and meets market expectations, the valuation is expected to rise to over RMB 80 billion, with a growth space of more than 100%
• Baidu holds 59.45% of the shares, corresponding to a value increment of about RMB 28 billion

• Spin-off allows Kunlunxin to finance and operate independently, improving decision-making efficiency
• Baidu still maintains control and shares in Kunlunxin’s growth dividends
• Each business segment can develop at its own pace, improving capital efficiency

• The AI chip industry adopts strategic value pricing instead of traditional financial indicators
• Factors such as domestic substitution and national strategic support drive valuation upward
• Kunlunxin is expected to replicate the valuation path of companies like Cambricon [5]

• Uncertainty in performance fulfillment
• Intensified market competition
• Valuation volatility risk

Kunlunxin’s valuation logic is the triple superposition of

:

1. Strategic Positioning Value
   : Occupy an irreplaceable position in the AI industry chain
2. Growth Expectation Premium
   : JPMorgan predicts a sixfold revenue growth in 2026 [1]
3. Domestic Substitution Dividend
   : China’s AI chip localization rate is expected to increase from 17% to 55% [5]

This valuation logic has been verified on the Science and Technology Innovation Board, as evidenced by the high valuations of companies like Cambricon [5].

(Probability 60%): Kunlunxin successfully lists, with valuation reaching the range of RMB 60-80 billion, and Baidu’s holding value increases by about RMB 25-35 billion

(Probability 25%): Market enthusiasm is high, valuation exceeds RMB 100 billion, and Baidu’s holding value increases by more than RMB 40 billion

(Probability 15%): Changes in market environment or unmet performance expectations, valuation remains below RMB 30 billion, and value unlocking is limited

: Baidu investors should to the progress of the spin-off, but need to and dynamically adjust positions according to the actual valuation and performance after listing.

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[1] Sina Finance - “Baidu Proposes to Spin Off Kunlunxin for Independent Listing on the Main Board of the Hong Kong Stock Exchange, JPMorgan Predicts Kunlunxin’s Revenue Will Grow Sixfold This Year” (https://finance.sina.com.cn/stock/hkstock/2026-01-02/doc-inhewqnt3784171.shtml)

[2] Sina Finance - “Baidu Group-SW: Proposal to Spin Off Kunlunxin for Independent Listing on the Main Board of the Hong Kong Stock Exchange” (https://finance.sina.com.cn/stock/hkstock/ggscyd/2026-01-02/doc-inhewkex2345595.shtml)

[3] AAStockS - “Baidu (09888.HK) Rises Over 5% as Kunlunxin Submits Listing Application to the Hong Kong Stock Exchange” (http://www.aastocks.com/tc/stocks/news/aafn-con/NOW.1493425/latest-news/AAFN)

[4] Securities Times - “Year-end Review | Supported by Computing Power Localization, GPU New Stocks in the Capital Market Surge Forward” (https://www.stcn.com/article/detail/3559385.html)

[5] Sina Finance - “The Valuation Wonder of China’s AI Chips: How Can RMB 6.6 Billion Revenue Support a Trillion RMB Market Value?” (https://finance.sina.com.cn/tech/roll/2025-12-22/doc-inhcrpzp4742538.shtml)

[6] Xinhua Finance - “[Financial Analysis] 2025 AI Computing Power Becomes the Core Main Line: Multiple Concept Stocks Welcome ‘Highlight Moment’ Profit Realization Gains Sustained Premium” (https://m.cnfin.com/yw-lb//zixun/20251231/4359053_1.html)

[7] Sina Finance - “AI Drives Structural Transition of the Semiconductor Industry: How Will the Market Evolve in 2026? | Year-end Review” (https://finance.sina.com.cn/stock/t/2025-12-30/doc-inhequpk4183074.shtml)