Latest Search
Quote
| Back Zoom + Zoom - | ||||
|
<Research>CMS Sees CN Internet Industry Moving From Stability to Recovery; Top Picks TENCENT/ NETEASE/ TME
Recommend 37 Positive 54 Negative 25 |
||||
|
||||
|
China Merchants Securities wrote in a report that China's Internet industry is moving from stability to recovery. Over the past two weeks, a boost in overall stock market sentiment has fuelled a sharp rebound in China's Internet sector. Prior to this strong rebound, the broker had already observed a steady recovery in the sector's valuations from the bottom since January. Recent share prices have been supported by impressive results in 4Q23, which have led to a significant increase in shareholder returns in the form of cash dividends, new share buyback programmes, or an increase in the size of existing buybacks. CMS believed that compared to the small valuation peak following the post-pandemic recovery, the Internet industry is still at a low valuation level, with a 53% EV/EBITDA discount to its overseas peers. Some companies still have impressive growth potential, such as TENCENT (00700.HK), TME-SW (01698.HK) (TME.US), and PDD (PDD.US), which were forecasted to grow at a compound annual growth rate of 29% in EBITDA from 2023 to 2025. The broker expected the outlook from managements of Internet companies for the remaining quarters of the year to be more optimistic than the solid results in 1Q24, as 1Q is usually a slow season for the e-commerce and advertising businesses, which are the two main revenue pillars for companies in the industry. Meanwhile, the e-commerce business is expected to grow modestly, while the advertising business is forecasted to maintain good growth, driven in part by games. CMS is waiting for more positive news to push earnings upwards. TENCENT, NTES-S (09999.HK) (NTES.US) and TME are the broker's top picks, while value investments with impressive shareholder returns, such as BABA-SW (09988.HK) (BABA.US), JD-SW (09618.HK) (JD.US) and Vipshop (VIPS.US), are also considered attractive. AAStocks Financial News |
||||
Copied to Clipboard
 |
||||
