China e-commerce is one of Goldman’s top preferred sub-sectors — and there will be six key themes coming up in 2024, the bank said. The themes are: Consumers’ focus on value for money — for which e-commerce platforms are well positioned. Advertising tech upgrades to drive platform take rate, which refers to the amount of money — made up of fees and commissions — made from a transaction. Livestreaming growth. Market expansion from overseas opportunities. User engagement set to be driven by content creation and categories that will draw traffic. Other growth drivers, including on-demand services, grocery and pharmaceuticals. Goldman said that despite slowing consumption growth in China, e-commerce and e-commerce advertising is still one of its top preferred sectors — thanks in part to global expansion and attractive valuations. The bank named three Chinese stocks it says are “well positioned across the six themes.” They are Alibaba , which is on Goldman’s conviction list, Pinduoduo , and Kuaishou . All have a buy rating from Goldman. Goldman’s conviction list stocks are buy-rated names it expects to outperform. The bank said Pinduoduo continues to gain market share in domestic e-commerce, as it improves its tools to drive the adoption of its advertising products. Goldman also expects its global e-commerce arm Temu to continue its growth momentum as a result of its global expansion. Launched in the U.S. in September last year, Temu was PDD’s first major push outside of China and the app quickly found success among budget-conscious consumers. “We … expect Pinduoduo to be more resilient in bear/stress test scenarios due to its strongest value-for-money customer mind share,” said the bank. Pinduoduo is known for its bargain-priced products. It gave Pinduoduo a price target of $155, or potential upside of about 9%. As for Alibaba, the renewed focus on its Chinese online shopping platform Taobao “could potentially drive more growth under the environment where consumers pivot towards more value-for-money” goods, Goldman said. The bank said it expects ongoing buybacks funded by Alibaba’s free cash flow generation. It gave Alibaba a price target of $134, or potential 79% upside. Goldman expects its third favored name — Kuaishou — to continue outpacing the industry. It noted that Kuaishou has strong mind share – consumers’ awareness of a brand — in China’s lower-tier cities. It gave Kuaishou a potential upside of 59%, as of its Nov. 15 note. — CNBC’s Michael Bloom, Evelyn Cheng contributed to this report.
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