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China Internet stocks
24 Nov 2021 (258 views)  

The internet stocks in China had dropped sharply in recent months due to two factors - restrictions placed by USA regulators on China stocks listed in America, and the measures taken in China to control their monopolistic practices and data security.

I studied the financial indicators for the internet stocks shown in the table below. 

Here are my observations:

a) Baased on forward PE ratio - the ranking (from lowest) are Weibo, Baidu, Alibaba, and Tencent. I consider a PE ratio of 30 to be too high. I suspect that the figure for Weibo is a mistake.

b) The stocks have dropped 17% to 63% from their recent high. The biggest drop is Pinduoduo (63%) and the smallest is JD (17%).

c) Most of the stocks have a forward PE ratio higher than the trailing PE ratio (except for Alibaba and Weibo). This shows a likely drop in earnings due to the controls imposed in China.

d) Pinduodo, Meituan and Didi have high stock prices and low earnings.

Based on the forward PE ratio, I would select Weibo (the figure need to be verified), Baidu and Alibaba. 

However, my preference is or Baidu, rather than Alibaba, because of the potential catalyst from its Apollo Go robotaxi business. (I have invested in Baidu).

Note - this is my personal observation. I am not giving financial advice.

Tan Kin Lian

 


China Internet stocks
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The internet stocks in China had dropped sharply in recent months due to two factors - restrictions placed by USA regulators on China stocks listed in America, and the measures taken in China to control their monopolistic practices and data security.

I studied the financial indicators for the internet stocks shown in the table below. 

Here are my observations:

a) Baased on forward PE ratio - the ranking (from lowest) are Weibo, Baidu, Alibaba, and Tencent. I consider a PE ratio of 30 to be too high. I suspect that the figure for Weibo is a mistake.

b) The stocks have dropped 17% to 63% from their recent high. The biggest drop is Pinduoduo (63%) and the smallest is JD (17%).

c) Most of the stocks have a forward PE ratio higher than the trailing PE ratio (except for Alibaba and Weibo). This shows a likely drop in earnings due to the controls imposed in China.

d) Pinduodo, Meituan and Didi have high stock prices and low earnings.

Based on the forward PE ratio, I would select Weibo (the figure need to be verified), Baidu and Alibaba. 

However, my preference is or Baidu, rather than Alibaba, because of the potential catalyst from its Apollo Go robotaxi business. (I have invested in Baidu).

Note - this is my personal observation. I am not giving financial advice.

Tan Kin Lian