CMB International released a report stating that although facing some macro headwinds, leading platform internet companies still maintain business resilience, benefiting from continuous cost reduction and efficiency enhancement, with healthy profit growth and stable shareholder returns. The current industry valuation is at a low point, with strong defensiveness, and potential upward factors for earnings next year come from macro policy stimulus, overseas expansion opportunities, and AI business progress.

The firm prefers sub-industries in the following order: local life services → advertising → Gaming = value-added services → e-commerce → cloud → live streaming. Top picks are Meituan (03690.HK), Tencent (00700.HK), Tencent Music (TME.US), and Alibaba (BABA.US).

The firm indicated that the leading internet platforms maintained resilience in the third quarter with an average year-on-year revenue growth of 12% and a core net profit growth of 28% year-on-year, benefiting from efficiency improvements, with most companies continuously achieving profit growth above expectations. In terms of business segments, it was noted that key companies' local life services and advertising businesses realized a year-on-year growth of 10 to 20% in the third quarter, while e-commerce, Gaming, and cloud businesses achieved medium to high single-digit year-on-year growth, and live streaming businesses continued to show a year-on-year decline.

Stocks | Investment Rating | Target Price

Tencent (00700.HK) | Shareholding | 500 HKD

Alibaba (BABA.US) | Shareholding | 126 USD

PDD Holdings (PDD.US) | Neutral | 111 USD

Meituan (03690.HK) | Shareholding | 212 HKD

NetEase (NTES.US) | Shareholding | 116 USD

JD.com (JD.US) | Shareholding | 46 USD

Tencent Music (TME.US) | Shareholding | 15 USD

Bilibili (BILI.US) | Shareholding | 22 USD

Vipshop (VIPS.US) | Neutral | -

Cloud Music (09899.HK) | Shareholding | 152 HKD