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How the Valuations of China’s Major Tech Stocks Look

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Valuations of China’s major tech stocks

On one hand, the US is initiating a trade war against China, and the Chinese government has launched a crackdown on online gaming companies. Chinese companies are collaborating with US companies to combat their respective and common competitors. Optimistic revenue and earnings estimates continue to drive the valuations of Chinese tech stocks despite the loss in stock value.

Tencent Holdings (TCEHY) last traded at a 29% discount to its 52-week high price. The stock has a “buy” recommendation from one analyst. The PE multiples for fiscal 2018, 2019, and 2020 are 38.3x, 27.9x, and 19.6x, respectively. The stock has lost 16.9% YTD (year-to-date).

NetEase (NTES), which last traded at a 48% discount to its 52-week high price, has “strong buy,” “buy,” and “hold” recommendations from five, 13, and 12 analysts, respectively. The PE ratios for the comparable periods are 24.4x, 19.8x, and 16.7x. The stock has lost 42.7% YTD.

Alibaba Group Holding (BABA) last traded at a 17% discount to its 52-week high price and has “strong buy,” “buy,” and “hold” recommendations from 15, 27, and one analyst, respectively. The PE ratios for the comparable periods are 30.8x, 22.8x, and 17.6x, respectively. The stock has gained 1.5% YTD.

Baidu (BIDU), which last traded at a 20% discount to its 52-week high price, has a “strong buy,” “buy,” and “hold” recommendations from eight, 14, and nine analysts, respectively. The PE ratios for the comparable periods are 22x, 19.1x, and 15.8x, respectively. The stock has lost 3.3% YTD.

iQiyi (IQ) spun off from Baidu in March 2018. Baidu holds a controlling stake in the Netflix of China. iQiyi last traded at a 37% discount to its 52-week high price and has “strong buy,” “buy,” “hold,” and “sell” recommendations from two, one, and three analysts, respectively. The stock has gained 85.9% since its IPO.

Huya (HUYA) spun off from YY in May 2018. YY and Tenant Holdings have substantial stakes in China’s leading live-streaming platform. Huya last traded at a 45% discount to its 52-week high price and had a “hold” recommendation from three analysts. The PE ratios for the comparable periods are 119.4x, 50x, and 30x, respectively. The stock has gained 74.5% since its IPO.

JD.com (JD), which last traded at a 38% discount to its 52-week high price has “strong buy,” “buy,” and “hold” recommendations from six, 16, and 12 analysts, respectively. The PE ratios for the comparable periods are 73.7x, 35.1x, and 22.1x, respectively. The stock has lost 24.4% YTD.

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