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against the backdrop of continued releases of favorable policies and rising market enthusiasm, china's e-commerce industry is expected to bring about a revaluation of value.

on september 30, goldman sachs pointed out in its latest research report that as the government launches strong growth-promoting policies and the e-commerce market environment gradually normalizes, the market shares of major e-commerce platforms have stabilized.the e-commerce industry will become one of the most important areas for revaluation in china’s internet sector. goldman sachs raised its preference for e-commerce in its china internet industry sub-sector to the top two, tied with the gaming industry.

currently, the total market value of china’s e-commerce market is us$500 billion, compared with amazon’s market value of us$2 trillion.

goldman sachsit is pointed out that the median expected 12-month price-earnings ratio of china's internet industry is 14.3 times, which is still more than 40% discount compared to the u.s. internet.however, the valuations of e-commerce companies such as alibaba, pinduoduo and jd.com are only 9-12 times, which is still lower than the median of china’s internet industry. there is huge potential for value revaluation.

china's e-commerce is more cost-effective and has outstanding investment value

goldman sachs pointed out that recent market data shows that the median expected 12-month price-earnings ratio of china's internet industry is 14.3 times, which is still more than a 40% discount compared to the u.s. internet.especially for china's e-commerce sector, the valuation is as low as 7-12 times, which is far lower than similar companies in the united states.

according to goldman sachs, the government's stimulus policies have stabilized china's e-commerce market, with the market shares of major players such as alibaba, pinduoduo and jd.com basically fixed.the price-to-earnings ratios of alibaba, pinduoduo and jd.com remain at 9-12 times, which is lower than the median of 14.3 times for the above-mentioned chinese internet industry, so "this valuation is quite attractive."

goldman sachs said:

the valuations of china's top 20 internet companies have recovered, and their market value has exceeded the high point in january 2023. however, the combined 12-month expected net profits of these companies increased by 67% compared with january 2023 expectations.

in the past week, the stock prices of e-commerce companies have increased significantly by 16%-32%.however, given the industry's solid profit growth, low valuations, and support from government policies, goldman sachs believes that this rebound may be more sustainable.

double eleven shopping festival becomes key node to boost consumption

goldman sachs said that the pattern of china’s e-commerce market is further normalizing. with the further development of live streaming, competition among e-commerce platforms has become increasingly fierce, but leading companies have responded effectively. taobao, tmall and jd retail have successfully defended their respective market shares in recent months.

the e-commerce industry will become one of the most important areas for revaluation in china's internet sector. benefiting from the acceleration of online transformation and the promotion of advertising technology, the industry's growth rate is expected to continue to be higher than china's gdp and consumption growth.

goldman sachs predicts that by 2025, the e-commerce industry's gross merchandise volume (gmv) will grow by 7%, advertising revenue will grow by 12%, and domestic platform profits will grow by 13%.

the research report pointed out thatthe double eleven shopping festival may become a key node to boost consumption.in the fourth quarter, the growth of online retail goods will accelerate to 8% year-on-year, 1 percentage point higher than previously expected, mainly due to the government's trade-in program and consumer vouchers and other consumer-stimulating policies.

revaluation of share prices of major e-commerce companies

goldman sachs raised e-commerce's preference in its china internet industry sub-sector to the top two, tied with the gaming industry.and conduct stock price analysis of several important companies:

• tencent: game revenue is expected to accelerate, and advertising and financial technology businesses also have potential. the target price has been raised from hk$464 to hk$521.

• alibaba: the target price was raised from us$108 to us$134, and the core business is expected to continue to grow.

• pinduoduo: the target price was raised from us$165 to us$169, believing that the market may have underestimated the growth potential of its domestic business.

• jd.com: the target price was raised from us$40 to us$45. goldman sachs believes that jd.com, as the largest 1p retailer, still has room for revaluation.

• meituan: the target price rose from hk$157 to hk$194. although its valuation is higher than the industry average, its market position in food delivery and in-store services is strong.

the research report also pointed out that cooperation between e-commerce platforms, such as taobao and tmall incorporating jd logistics into its logistics provider and opening alipay in jd mall, may bring new growth momentum.