China Merchants International reported that the overall consumption performance from March to May was weak due to the epidemic, but the recent 618 performance of the e-commerce industry confirmed the trend of steady recovery in consumption. For example, JD.com achieved a 10% year-on-year growth. The bank believes that the second quarter was a trough for e-commerce and the advertising industry. But there are also some businesses that have benefited from the epidemic, such as supplying daily necessities and fresh local community services, and pure online businesses such as games have maintained solid growth. In addition, the regulatory environment has stabilized and the number of major policies in the Internet industry has decreased, especially for platform initiatives.

The bank believes that the three key drivers of the Internet industry in the second half of 2022 are: 1) steady increase in revenue; 2) higher-than-expected profit margin performance from cost control; and 3) stable regulatory environment. The preferred line is$Meituan-W (03690.HK) $、$JD.com Group-SW (09618.HK) $, NetEase, Inc (09999) The average price-to-sales ratio of the covered stocks over the next 12 months is now 2.7 times, compared with an average of 4.3 times over the past five years and a peak of 3.6 times in the first quarter.