Jefferies Raises Price Targets on China’s Internet Stocks

Investing.com — Jefferies has raised the price targets for various Chinese internet stocks following recent stimulus measures aimed at supporting the struggling economy.

Updated Price Targets

The firm’s analysts adjusted their price objectives for the following companies:
– Alibaba (NYSE:BABA) from $116 to $142
– JD.com (NASDAQ:JD) from $43 to $54
– Pinduoduo (NASDAQ:PDD) from $151 to $181
– Tencent from HK$490 to HK$540
This incorporates a higher valuation multiple and updates estimates to fiscal year 2026 (FY26).

Analyst Insights

Jefferies analysts noted that prior to the recent policy measures, online shopping was trading at the low end of sector valuations, around 8-9x, which is a 40%-50% discount compared to the high end at 15-16x. They expect the valuation gap to narrow due to improving sentiment.

Key Events to Watch

Key metrics to monitor include:
– Alibaba’s narrowing Gross Merchandise Value (GMV) and Customer Management Revenue (CMR) growth gap
– Daily Active Users (DAU) synergies
– Improved non-GAAP earnings from Alibaba International Digital Commerce Group (AIDC)

JD.com is anticipated to benefit from robust supply chain capabilities and an expected upswing in electronics trade-ins.

Broader Price Target Adjustments

Jefferies also raised price targets for:
– Meituan (HK:3690)
– Tongcheng-Elong Holdings Ltd (HK:0780)
– Ke Holdings Inc (NYSE:BEKE)
– Full Truck Alliance Co Ltd ADR (NYSE:YMM)
– Bilibili (NASDAQ:BILI)
– Kuaishou Technology (HK:1024)
– JD Logistics Inc (HK:2618)
– Kanzhun Ltd ADR (NASDAQ:BZ)
– Qifu Technology Inc DRC (NASDAQ:QFIN)

Over the last 20 years, significant rallies in the internet sector have stemmed from critical events leading to valuation changes. Recent policy measures have triggered a notable sector rally, with Jefferies noting the re-rating of online shopping fundamentals.

Currently, China’s internet sector averages a P/E ratio of around 12x, representing a 40-50% discount to global competitors.