Chinese internet sector’s top pick for H2 is JD.com, followed by Meituan, Trip.com – Citigroup

 

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Chinese internet sector’s second-quarter results came in significantly ahead of the forecasts, especially in terms of earnings, said Citigroup in a note. The bank’s sub-sector preference for the remainder of 2022 in pecking order was e-commerce, local services, online advertising and online gaming.

For the second half of 2022, Citigroup’s sector top picks in pecking order was JD.com, followed by Meituan, Trip.com, Baidu, and JD Logistics, according to the note.

The bank viewed Alibaba Group as an attractive macro play and Pinduoduo Inc as an opportunity to boost alpha, while remaining constructive on Tencent Holdings’ video account and international games as catalysts.

While it’s too early to comment on the companies’ third-quarter revenue, the Covid flareups in more mainland regions in September, economic activities and the trend of recovery will be disrupted, the bank said, though it still expects the internet sector’s overall performance in the third quarter to be stronger than the second quarter.

Chinese internet sector’s second-quarter results came in significantly ahead of the forecasts, especially in terms of earnings, said Citigroup in a note. The bank’s sub-sector preference for the remainder of 2022 in pecking order was e-commerce, local services, online advertising and online gaming.

For the second half of 2022, Citigroup’s sector top picks in pecking order was JD.com, followed by Meituan, Trip.com, Baidu, and JD Logistics, according to the note.

The bank viewed Alibaba Group as an attractive macro play and Pinduoduo Inc as an opportunity to boost alpha, while remaining constructive on Tencent Holdings’ video account and international games as catalysts.

While it’s too early to comment on the companies’ third-quarter revenue, the Covid flareups in more mainland regions in September, economic activities and the trend of recovery will be disrupted, the bank said, though it still expects the internet sector’s overall performance in the third quarter to be stronger than the second quarter.