Against the backdrop of continuously releasing bullish policies and the market's sustained enthusiasm, the chinese e-commerce industry is expected to bring about a value reassessment.

On September 30, Goldman Sachs pointed out in its latest research report that with the government rolling out strong growth-promoting policies and the gradual normalization of the e-commerce market environment, the market share of major e-commerce platforms is stabilizing, making the e-commerce industry one of the most important areas for valuation reassessment in the chinese internet sector. Goldman Sachs raised its preference for e-commerce to the top two positions in its chinese internet sector sub-sectors, tied with the gaming industry.

Currently, the total market cap of the chinese e-commerce market is $500 billion, while Amazon's market cap is as high as $2 trillion.

Goldman Sachs pointed out that the median PE ratio of the Chinese internet plus-related industry for the next 12 months is 14.3 times, with a discount of over 40% compared to the USA internet plus-related industry. The valuations of e-commerce companies such as alibaba, pdd holdings, and jd.com are only 9-12 times, still lower than the median of the chinese internet plus-related industry, with great potential for value reassessment.

Chinese e-commerce offers better value for money, highlighting its investment value.

Goldman Sachs pointed out that recent market data shows that the median price-earnings ratio of the chinese internet sector is 14.3 times in the next 12 months, still at a discount of over 40% compared to the US internet sector. Particularly in the chinese e-commerce sector, valuations are as low as 7-12 times, significantly lower than similar companies in the USA.

According to Goldman Sachs, government stimulus policies have stabilized the chinese e-commerce market, with major players like Alibaba, pdd holdings, and jd.com maintaining their market shares basically fixed. The price-earnings ratios of Alibaba, pdd holdings, and jd.com are still at 9-12 times, lower than the median of 14.3 times in the above chinese internet industry, making them "quite attractive in terms of valuation".

Goldman Sachs said:

The valuation of China's top 20 internet companies has been partially restored, with a market cap surpassing the peak in January 2023. However, the total 12-month expected net income of these companies has increased by 67% compared to the expectations in January 2023.

Over the past week, the stock prices of e-commerce companies have significantly risen by 16%-32%. Considering the industry's stable profit growth, low valuations, and government policy support, Goldman Sachs believes that this rebound may be more sustainable.

Singles' day sales has become a crucial point to boost consumer spending.

Goldman Sachs stated that the landscape of the Chinese e-commerce market is further normalizing. With the deepening development of live streaming sales, competition between e-commerce platforms is intensifying. However, leading companies have effectively responded, as Taobao, Tmall, and JD.com have successfully maintained their market shares in the past few months.

The e-commerce sector will become one of the most important areas for revaluation in the Chinese internet industry. Benefiting from accelerated online transformation and advancements in advertising technology, the industry's growth rate is expected to remain higher than China's GDP and consumer spending growth.

Goldman Sachs predicts that by 2025, the total volume of commodity trades (GMV) in the e-commerce sector will increase by 7%, advertising revenue will increase by 12%, and the profits of domestic platforms will grow by 13%.

Research reports indicate that the singles' day sales may become a key point in boosting consumption. Online retail product growth in the fourth quarter is expected to accelerate to 8% year-on-year, 1 percentage point higher than previously expected, mainly due to government initiatives such as trade-in programs and consumer vouchers to stimulate consumption.

Stock prices of major e-commerce companies are being reassessed.

Goldman Sachs has raised its preference for e-commerce to the top two in its China internet industry sector alongside the gaming industry, and conducted stock price analysis on several important companies:

• $TENCENT (00700.HK)$ The gaming revenue is expected to accelerate, with potential in advertising and cni xiangmi lake fintech index business, and the target price is raised from HKD 464 to HKD 521.

• $Alibaba (BABA.US)$ The target price is raised from USD 108 to USD 134, with expectations of continued growth in core business.

• $PDD Holdings (PDD.US)$ The target price is raised from USD 165 to USD 169, believing that the market may be underestimating the growth potential of its domestic business.

• $JD.com (JD.US)$ The target price has been raised from $40 to $45, and Goldman Sachs believes that jd.com, as the largest 1P retailer, still has room for valuation reassessment.

• $MEITUAN-W (03690.HK)$ The target price has been raised from 157 Hong Kong dollars to 194 Hong Kong dollars, despite being valued higher than the industry average, its strong market position in food delivery and offline services.

Research reports also point out that with cooperation between e-commerce platforms, such as Taobao Tmall incorporating JD.com's logistics as a logistics supplier, and enabling Alipay within JD.com's mall, may bring new growth drivers.

Editor/ping