In "Major Banks," China International Capital Corporation (CICC): The attractiveness of mainland online platform stocks has increased, with a core recommendation for Tencent and attention to Kuaishou and NetEase

CICC published a report on the mainland online platform industry, stating that recently, the overall market sentiment has turned low, leading to a correction pattern across the sector. Currently, the overall valuation of the sector is between the mean and the 25th percentile. From a fundamental perspective, the overall performance of the sector is stable, with healthy growth still seen in key areas such as advertising and gaming. Key companies like Tencent (00700.HK) continue to show improved profit margins and operational leverage. Furthermore, the firm believes that AI is still in a phase of rapid development, and compared to the aggressive capital expenditures of overseas tech giants, domestic internet companies are making more practical and sustainable investments. The firm still believes that AI will become an important incremental opportunity for some internet companies in the future.

Overall, the fundamentals are robust, the potential of AI remains, but valuations are decreasing, leading the firm to believe that the sector's attractiveness is increasing. In summary, the core recommendation is Tencent Holdings, with suggestions to pay attention to KUAISHOU-W (01024.HK), NetEase (09999.HK), Zhiyu City Technology (09911.HK), and Bilibili (09626.HK).

CICC stated that the vast majority of mainland online platform companies are entering a "reasonable" range of predicted price-to-earnings ratios of 15 to 20 by 2026, which means that once any company's performance exceeds expectations in the future, it is likely to enjoy a dual increase in performance and valuation. Bilibili has long been in a state of overvaluation within the sector, while BOSS Zhipin-W (02076.HK), Tencent Music-SW (01698.HK), and NetEase Cloud Music (09899.HK) have remained at medium to high valuation levels. However, looking ahead to the 2026 forward valuation levels, aside from Bilibili (20 to 25 times) and KUAISHOU (10 to 15 times), key companies such as Tencent, NetEase, BOSS Zhipin, Tencent Music, and NetEase Cloud Music are all at levels of 15 to 20 times. CICC believes that for companies with a positive long-term outlook and short-term performance exceeding expectations, a valuation of 20 to 25 times is also reasonable, and the current valuations of most companies in the sector lay a good foundation for future companies that exceed performance expectations