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<Research>UOB Kay Hian: CN Policy Launch To Foster Consumption, Recovery of Internet Valuation; Top Picks: TENCENT>TRIP.COM>MEITUAN
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In view of the stronger-than-expected implementation of the Chinese government's policies, UOB Kay Hian believed that the improvement in consumer sentiment will be boon to e-commerce, local lifestyle services and online travel agency (OTA) companies, UOB Kay Hian said in a report. Looking ahead to 2H24, the broker expected the low valuation of internet companies to be repaired through shareholder returns, cross-border expansion and competition relief. The broker also assumed that the development of AI-generated content (AIGC) and the upgrading of advertising technology will foster monetization momentum. In terms of e-commerce, compared to Amazon (AMZN.US)’s market cap of US$2 trillion, the market cap of China's four major e-commerce companies - BABA-W (09988.HK), JD-SW (09618.HK), Pinduoduo (PDD.US) and KUAISHOU-W (01024.HK) - are significantly undervalued, with a combined market cap of US$566 billion. The upcoming “Double 11” shopping festival could become a key moment to boost consumption. Coupled with government policy support such as trade-in campaigns and consumer vouchers, the broker forecast that consumers will be cheered up. The broker expected Alibaba and JD.com to regain growth momentum in gross merchandise value (GMV) in 2H24 through increased investment and commission rates. The broker's top picks in the internet sector are, in order, TENCENT (00700.HK), TRIP.COM-S (09961.HK) and MEITUAN-W (03690.HK). Stock | Investment rating | Target price (HKD) BABA-W (09988.HK) | Buy | 130 JD-SW (09618.HK) | Buy | 190 TENCENT (00700.HK) | Buy | 570 NTES-S (09999.HK) | Buy | 180 BIDU-SW (09888.HK) | Hold | 99 MEITUAN-W (03690.HK) | Buy | 235 KUAISHOU-W (01024.HK) | Buy | 70 BEKE-W (02423.HK) | Buy | 67 TRIP.COM-S (09961.HK) | Buy | 630 TONGCHENGTRAVEL (00780.HK) | Hold | 18 KINGSOFT (03888.HK) | Buy | 38 WEIMOB INC (02013.HK) | Sell | 1.3 AAStocks Financial News |
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