Sina Technology News January 8 evening news, according to reports, at the beginning of the new year, a number of Wall Street investment banks have selected their most optimistic about the Chinese technology stocks in the coming year, including Alibaba, Tencent and JD.com.
Analysts at Citi, Jefferies and Stifel took into account e-commerce spending, online ad prices and a “five-year plan” aimed at boosting domestic consumption to pick their favorites.
Internet stocks in the Asia-Pacific region (excluding Japan) are at a crossroads, creating a “significant opportunity” for investors, said Jefferies analysts led by Thomas Chong.
Among the top picks of the three investment banks above, a few names keep popping up. And, all three banks put a particular emphasis on one stock.
All analysts chose Alibaba, the Chinese e-commerce giant. Among them, Furui emphasized the company’s diversification strategy, including package tracking services, and investments in companies such as Electronic components maker Tongda.
Alibaba stock is also a top pick for Citi. Citi analysts said in a Jan. 3 report that Alibaba has “stable” growth prospects and an “attractive” valuation.
Alibaba’s fundamentals are expected to “remain strong,” analysts at Stifel said in a note on Tuesday.
Tencent is another stock to watch. Furui noted that Tencent is a popular gaming platform with rising average revenue per user. Also, Tencent’s overall share of the online advertising market is impressive.
Citi analysts are bullish on Tencent’s WeChat mini-program and say Tencent will benefit from the goal of digitizing China’s traditional industries. Foxconn and Citi have rated Tencent stock a “buy.”
Analysts at Stifel recommend holding shares of Tencent Music, while Jefferies has a “buy” rating on Tencent Music shares. Analysts expect Tencent Music’s future growth to come from things like long-form audio and online advertising.
Both Stifel and Furui gave JD.com a “buy” rating. “JD.com has a mature business model that can capture long-term opportunities in the grocery sector,” said the analysts at Furui. Stifel expects JD.com’s profit margins to gradually improve over the next few years.
Cloud companies Kingdee and Kingsoft Cloud are also among Wall Street’s picks. Citi analysts expect Kingdee’s cloud revenue to reach 5 billion yuan ($774 million) by 2022. In addition, Kingdee also has the potential to take market share from overseas competitors.
It is reported that Kingsoft Cloud provides cloud services to ByteDance. From 2020 to 2023, the compound annual growth rate of its cloud revenue is expected to exceed 40%, Furui said.
To sum up, Citi analysts prefer H-shares, which are publicly traded stocks in Hong Kong, compared to A-shares. A-shares refer to Chinese company stocks traded on the Shanghai or Shenzhen exchanges.