On October 14, $Alibaba (BABA.US)$Please use your Futubull account to access the feature.$PDD Holdings (PDD.US)$Please use your Futubull account to access the feature.$JD.com (JD.US)$ Both started Singles' Day sales on the same day without prior agreement. Compared to the opening time of pre-sale activities in previous years, it was advanced by a full 10 days, and with the expected return period extending until November 30, it will once again refresh the Singles' Day shopping cycle, becoming the longest e-commerce shopping festival in terms of duration.

Nomura pointed out that China's series of stimulus policies launched at the end of September focus on stabilizing real estate and boosting consumer demand. If consumer sentiment can improve, it is expected that the Chinese e-commerce sector has the potential to outperform the overall market in the short term.

Goldman Sachs, on the other hand, stated that the Singles' Day shopping festival could be a key point in boosting consumer spending, making the e-commerce industry one of the most important areas in the revaluation of valuations in the Chinese internet sector.

This year's November 11 shopping festival-related has experienced some "new changes".

Alibaba, Tencent, JD.com, Meituan, and other internet giants have initiated the 'interconnection' action, breaking through industry isolation and barriers. Since September this year, Alibaba, Tencent, and JD.com have already kicked off the 'interconnection' action. Taobao has fully integrated WeChat Pay, Meituan's takeout and hotel services officially joined Alipay mini programs. JD.com also announced that it will officially integrate with Alipay, expected to launch on the eve of Singles' Day.

Major e-commerce platforms are no longer focusing solely on low stock price promotions. From the marketing campaigns of platforms like Taobao, JD.com, PDD Holdings, it can be seen that the emphasis is no longer solely on low prices, terms like cost-effectiveness, lowest price, bottom price... are no longer emphasized to attract traffic. Instead, a series of unprecedented supportive policies have been introduced to help reduce costs for businesses, improve efficiency, and ultimately drive sales growth.

The three e-commerce giants show strong performance, with JD.com soaring 50% in twenty days.

Driven by the combination of domestic policy initiatives and the Fed rate cuts, the end of September saw a strong rally in Chinese assets represented by A-shares, H-shares, and Chinese concept stocks. Among them, Chinese concept e-commerce stocks performed particularly well. Taking the e-commerce trio as an example, as of October 17, JD.com surged over 50% in the past 20 days, leading the gains in Chinese concept stocks, while Pinduoduo and Alibaba also rose by nearly 30% and 21% respectively during the period.

• JD.com is undoubtedly the standout performer in this surge, with a stock price increase of over 50% in nearly 20 days.

JD.com and Alibaba are interconnected, jointly resisting the formidable "external enemy". Reports indicate that Alibaba's Tmall and JD Group's e-commerce platforms will be opened to each other, reaching consensus on logistics and payment cooperation. At the same time, JD will also integrate with Cainiao Express and Cainiao Post Network.

It is worth noting that in the first half of 2024, JD.com repurchased $3.3 billion worth of stocks and plans to continue increasing dividend payments. The company's current P/E ratio is 14 times, lower than most companies in the industry, making its valuation very cost-effective.

JD.com receives bullish reports from major banks and brokerages.

Nomura has raised JD.com's US stock target price from $38 to $53, mainly due to China's latest stimulus package potentially improving the overall retail environment, along with the expectation of JD.com exceeding profit expectations in the third quarter and an upward revision of JD.com's full-year profit forecast. Nomura predicts that many provinces in China have implemented subsidies for various electronic products, mainly targeting home appliances, which JD.com, as one of the largest sales channels for electronic products, can continue to benefit from. Nomura has raised JD.com's full-year net profit by 2% for this fiscal year, primarily due to the expected higher revenue from JD.com's logistics and estimates a 4.7% increase in JD.com's retail revenue for the full year, with an operating profit margin potentially expanding to 3.9%.

Haitong Int'l released a research report indicating that JD.com's total revenue in the third quarter is expected to reach 259.8 billion yuan, a year-on-year increase of 4.9% (previously expected to increase by 3.7%). Due to the government's strengthened policy of replacing old home appliances with new ones, it will drive positive growth in 3C and home appliance products. The bank believes that with the government policy driving the replacement of old appliances with new ones, JD's growth momentum has already entered the right track in the short term, maintaining its "Outperform" rating, and raising the target price to $60.

• The e-commerce 'old dominator' Alibaba, which completed a three-year rectification period, has also seen its stock price rise by over 20% in the past 20 days.

Behind the rapid recovery in stock price, investors are also reevaluating Alibaba.

On August 30th, regulators announced the end of Alibaba's three-year rectification. It is worth noting that during the three-year rectification period, there have been huge changes in the e-commerce industry landscape, with platforms like Pinduoduo, JD, and Douyin seeing rapid development. Pinduoduo's market cap even temporarily surpassed Alibaba's. Goldman Sachs' "Global E-commerce Handbook" released in 2023 also showed that from 2019 to 2023, the market share of Tmall has decreased from about 66% to 45%, eventually forming a landscape dominated by Alibaba, JD, and Pinduoduo as the three major players.

Additionally, on October 14, Hang Seng Index Company announced that Alibaba has been included in the Stock Connect and meets the requirements of the rapid inclusion rules for the relevant index. Alibaba will be included in the Hang Seng Stock Connect Hong Kong Index starting from October 28. This comes after Alibaba's dual primary listing on the Hong Kong Stock Exchange on August 28, achieving the goal of listing on the Hong Kong exchange after eleven years and gaining independent pricing power for its stock. More investors, especially those in mainland China, can also buy Alibaba through the Stock Connect.

In the first quarter of the 2025 fiscal year, Alibaba's total repurchase amount reached $5.8 billion, setting a new record for quarterly repurchases. According to statistics, in the past 2024 fiscal year, Alibaba has accumulated $12.5 billion for repurchases, ranking first in the scale of repurchases among Chinese concept stocks.

Institutions are generally bullish on Alibaba:

Citigroup stated in a report that investors' focus on Alibaba's upcoming September-end quarterly performance will be on macroeconomic prospects, consumer sentiment, and whether the recent and upcoming stimulus measures can translate into strong demand for the Singles' Day sales. The bank believes investors will be interested in the latest news on new users and conversion rates brought by Tmall Group and internet platforms, especially deepened cooperation with WeChat Pay, including the effectiveness of new advertising tools and merchant adoption, as well as the impact of a 0.6% fee charge. In addition, the bank considers the latest comments and performance of cloud and international business by management to be the focus of this conference call. The bank maintains a "buy" rating on Alibaba.

Haitong International stated that Alibaba's total revenue for the quarter ending in September is expected to increase by 6.5% year-on-year to 239.5 billion yuan, meeting market expectations; growth in cloud business and Alibaba International Digital Commerce Group (AIDC) is in line with expectations, with AIDC expected to achieve a 28.5% year-on-year growth in the third quarter; and cooperation with WeChat will bring new users to Alibaba. The bank maintains an "outperform the market" rating on Alibaba with a target price of $130, indicating that the company will attract short-term inflows as a mainland industry representative.

• Pdd Holdings, which 'shorted itself', has seen nearly a 30% increase in its stock price in the past 20 days.

In PDD Holdings' mid-year report released earlier, what worried investors more than the specific data in the financial report was the "pessimistic" signal released by the management during the earnings conference call. PDD Holdings' stock price fell by nearly 30% that day, followed by a series of subsequent declines. However, after a month and a half, PDD Holdings once again returned to the level before the mid-year report was released.

PDD Holdings, benefiting from the consumption downgrade dividend, has also vigorously expanded into overseas markets. The rapid rise of PDD Holdings' "overseas version" Temu has become a global application with tens of millions of users. According to reports, two years after its launch, Temu has surpassed eBay to become the world's second largest e-commerce website by global traffic, second only to Amazon.

Can e-commerce giants ride the wave again under the influence of the November 11 shopping festival?

The biggest signal that the industry is gradually improving is that the vicious competition of low stock prices on platforms is slowly fading away.

In light of the "longest ever" November 11 shopping festival, institutions also provide their views on the future of the e-commerce industry.

Nomura's recent research report pointed out that China's series of stimulus policies launched at the end of September focus on stabilizing real estate and stimulating consumer demand. If consumer sentiment can improve, the Chinese e-commerce sector is expected to outperform the broader market in the short term. The firm's short-term top picks are jd.com, pdd holdings, and alibaba, with "buy" ratings across the board. Nomura raised its target price for jd.com's US stock from $38 to $53. This is mainly due to China's latest stimulus measures possibly improving the overall retail environment, expectations of jd.com's third-quarter profits exceeding expectations, and an upward revision of jd.com's full-year profit forecast for this year.

Goldman Sachs has also indicated recently that with the strong growth-promoting policies introduced by the government 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 has raised its preference for e-commerce to the top two positions in its sub-sectors of the Chinese internet industry, on par with the gaming industry. Goldman Sachs also pointed out that the median price-to-earnings ratio for the Chinese internet industry in the next 12 months is 14.3 times, still at a discount of over 40% compared to the US internet sector. 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 industry, indicating a significant potential for revaluation.

Goldman Sachs further pointed out that the structure of the Chinese e-commerce market is further normalizing. The e-commerce industry will be one of the most important areas for valuation reassessment in the Chinese internet sector, benefiting from the acceleration of online transformation and the promotion of advertising technology, with industry growth expected to continue to outpace China's GDP and consumer growth. Goldman Sachs expects that the Singles' Day sales festival may become a key point in boosting consumption, and online retail goods growth in the fourth quarter is expected to accelerate to 8% year-on-year, an increase of 1 percentage point from previous expectations, mainly due to government stimulus policies such as the old-for-new program and consumption vouchers.

From this year's November 11 shopping festival, the entire e-commerce sector seems to be presenting a new landscape. On one hand, the focus is no longer solely on low prices, and on the other hand, policies are being introduced to reduce the burden on merchants. This also signifies that the industry environment is improving, investor confidence in the overall market is rising, and the future e-commerce industry may have even greater growth opportunities.

Editor/rice