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<Research>G Sachs Chooses Tencent/ NetEase/ Kuaishou as Core CN Gaming & Entertainment Stocks
Recommend 13 Positive 25 Negative 5 |
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China's gaming and entertainment sector experienced a sweeping rally in 2025, with medium- and large-cap stocks rising by 50-80% (compared to the HSCEI's 26%), according to a report from Goldman Sachs. In early 2026, this rally continued without losing any steam. Some stocks once soared by up to 30% (compared to the relevant index's around 3-5%). The broker attributed this rally half to valuation expansion and half to EPS growth. Looking ahead to 2026, Goldman Sachs has framed this sector's key themes and debates. While it considers future risk-reward still attractive, it has become more inclined towards alpha-driven. It favors companies with new growth potential (such as AI application penetration and accelerated overseas expansion) and those with room for compound growth/ earnings expansion despite intensified competition, especially amid competitive concerns brought by ByteDance. Goldman Sachs has selected TENCENT (00700.HK), NTES-S (09999.HK), Kuaishou, Bilibili (BILI.US), and Tencent Music as its core buy stocks. As for TENCENT, Goldman Sachs believes its core businesses (gaming + advertising) will continue to maintain low- to mid-teens growth annually with the sustainability of evergreen games, key product pipelines, and monetization/ AI benefits on the advertising ecosystem. Believing that TENCENT will be an important agent of AI applications and a core holding for investors, Goldman Sachs has kept a Buy rating on the company but lowered its TP from HKD770 to HKD752. AAStocks Financial News |
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