Event: in 2021, the Hang Seng technology index fell by 33.2%. From the beginning of 2022 to February 8, the Hang Seng technology index fell by 2.3%. At present, the market pays high attention to the consumption Internet sector of Hong Kong stocks (the main constituent stocks of Hang Seng technology index) and has great differences.
The views are as follows:
Looking forward to 2022, from the perspective of market liquidity, the overall trend of Hong Kong stocks is greatly affected by the monetary policy of the Federal Reserve. At present, the market expects that the Fed will adopt the monetary policy of raising interest rates and shrinking the table in 2022. It is expected to start raising interest rates in March and raise interest rates at least 4-5 times by December 2022; It is expected to shrink the table at the earliest in the middle of the year and at the latest at the end of the year. For the Internet sector of Hong Kong stocks, according to the report “Tencent holdings resume trading in 2021: stock price resilience is stronger than the market, and strong supervision does not affect the value of wechat” released by us on January 18, the monetary policy of the Federal Reserve has little negative impact on Tencent’s stock price at present; For Alibaba, US group, Jingdong, NetEase, Kwai Fu, B station, Baidu, micro-blog and other Internet companies listed in Hong Kong, we believe that the Federal Reserve monetary policy or have a negative impact on the company’s share price. For investment institutions, it is recommended to continue to wait and see, and then make investment decisions after landing in March.
At present, the development of consumer Internet (mainly consumer Internet companies in the Hong Kong stock Internet sector) is generalized in the market. The market expects the consumer Internet industry to enter a mature development stage. The main logic is that the number of mobile Internet users and the duration of per capita users are at a high level and rising slowly. In fact, according to the distribution scenario, the consumer Internet can be divided into two categories: content distribution and service distribution. Among them, the content of Internet, including information, online text, long video, short video, live broadcast, music, audio books, games and other subdivided tracks, meets the needs of users to kill time. The core of distribution efficiency is to attract users’ attention. The longer users use it, the stronger the stickiness of users; In the scenario of services (such as e-commerce, catering takeout, transportation, online medical treatment, housekeeping, automobile service, etc.), users focus on convenience, accuracy and timeliness. The core of distribution efficiency is users’ use frequency. The higher the use frequency, the stronger the user stickiness.
(1) the content Internet sector has not yet got rid of the money burning mode or developed new business formats iteratively. User fragmentation time is indeed fully filled by content Internet related companies. Tiktok and fast user growth are still relatively high, but the number of users in Himalaya and Kwai B stations is still growing faster. However, the market no longer recognizes the growth mode of burning money to obtain users. We believe that if relevant companies can get rid of the money burning mode or develop new business formats iteratively, they can still be recognized by the market and present investment opportunities. Kwai Fu, B station and other content Internet Co all disclosed the 2021 annual report in mid 3. For investment institutions, we suggest waiting for relevant companies to make investment decisions after issuing annual reports.
(2) the life service segment Internet track has low penetration and smooth cash flow. At present, the penetration rate of China’s catering takeout, online car hailing, community group purchase, integrated Wuxi Online Offline Communication Information Technology Co.Ltd(300959) car service and other sub circuits is still at a low level. For example, the penetration rate of China’s catering takeout in 2020 was 16.8% (according to the data of the National Bureau of Statistics). Compared with content Internet companies, which generally take advertising and live broadcasting as the main cash realization mode, life service Internet enterprises embed transaction links in the process of providing services to users, collect service fees or draw Commission as the main source of income, and have good cash flow characteristics. In addition to meituan’s listing in Hong Kong, Didi travel, tuhu car (to be listed), fast Dog Taxi (to be listed) and other companies are in the process of listing in Hong Kong. For Tencent holdings, our report “Tencent special topic: the essential value of wechat is distribution” released on December 21, 2021 concluded that wechat has upgraded search distribution and launched input method distribution mode with small programs, showing a trend of changing from distribution content to distribution service. We believe that life service Internet enterprises are generally in the loss stage, but due to the expansion period and low penetration rate, the market has a higher tolerance for the mode of burning money to obtain users.
Investment suggestions: Alibaba, Kwai Fu, USA group, B station and other Internet Co or the Fed’s interest rate increase, optimistic about life service Internet track, maintain Tencent Holdings “strongly recommended” rating.
Risk tips: (1) China continues to strengthen antitrust against Internet giants; (2) The US monetary policy has been greatly adjusted.
