Goldman Sachs: Mainland Internet industry most prefers e-commerce and gaming sectors, raises target prices for Tencent, Alibaba, JD.com, Meituan, and PDD

Goldman Sachs aligns e-commerce stocks with gaming stocks, considering them as the most preferred sectors in the mainland internet industry. Based on the mainland's stronger-than-expected growth and loose policies, the e-commerce market is expected to stabilize under the condition of roughly stable market share. With Alibaba, Pinduoduo, and JD.com trading at only 9 to 12 times earnings, with a combined market value of only $500 billion, compared to Amazon's $2.1 trillion market value. The bank believes that mainland e-commerce, as the world's largest e-commerce market, will provide the most significant value recovery among mainland internet stocks. The industry's growth is faster than mainland economic and consumption growth, benefiting from the increasing monetization rate driven by the shift to online shopping and advertising technology.

Based on improved visibility of macro and market environment and consumer outlook, the bank has raised the target price-to-earnings ratio for Tencent's advertising and fintech to 22 times and 18 times, for Meituan's in-store, hotel, and travel sectors to 20 times, for Alibaba Taotian Group to 10 times, for JD.com's retail to 10 times, and maintained Pinduoduo's local platform target price-to-earnings ratio at 13 times. Goldman Sachs has raised Tencent's target price from HKD 464 to HKD 521, Alibaba's target price from HKD 105 to HKD 131, JD.com's target price from HKD 157 to HKD 178, Meituan's target price from HKD 157 to HKD 194, and Pinduoduo's target price from USD 165 to USD 169, all rated as "Buy"