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<Research>CICC: CN Internet Sector Embarks on New Round of Expansion; Tencent, NetEase Strike Better Balance Between LT Investment & ST Financial Health
CICC has released its outlook report for China's internet sector for 2H25. After more than two years of cost-cutting and efficiency-boosting contraction, the industry’s f...
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<Research>CICC: CN Internet Sector Embarks on New Round of Expansion; Tencent, NetEase Strike Better Balance Between LT Investment & ST Financial Health
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CICC has released its outlook report for China's internet sector for 2H25. After more than two years of cost-cutting and efficiency-boosting contraction, the industry’s financial health has generally recovered, and the broker has observed since 2025 that the sector is clearly entering a new investment cycle, with AI, international expansion, and instant retail emerging as hot trends.

In CICC's opinion, innovation and risk-taking are deeply embedded in the DNA of the internet industry. Although optimistic about the incremental gains from most investments, from a secondary market investment perspective, the broker emphasized that it is important to leave ample buffer room and strike a balance between short-term and long-term priorities.

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Looking back at 2020, it was a year of expansion for the internet sector. BILIBILI-W (09626.HK)  +3.800 (+2.346%)    Short selling $60.16M; Ratio 13.114%   set a target of 400 million MAUs. Community group buying attracted investments in the billions from MEITUAN-W (03690.HK)  -1.500 (-1.138%)    Short selling $353.49M; Ratio 14.189%   , BABA-W (09988.HK)  -2.600 (-2.251%)    Short selling $403.47M; Ratio 7.766%   , Pinduoduo (PDD.US)      , and JD-SW (09618.HK)  +0.300 (+0.231%)    Short selling $102.38M; Ratio 15.689%   . TENCENT (00700.HK)  -2.000 (-0.390%)    Short selling $415.77M; Ratio 10.712%   's OPEX also surged rapidly.

While the subsequent impact of the pandemic and other factors directly slowed revenue growth in the internet sector, however, the momentum of investment was hard to stop, which led to dramatic fluctuations in industry earnings and even greater swings in valuations. Today, the industry is actively investing in the AI wave, expanding global operations, and laying out instant retail strategies.

CICC believes that companies such as TENCENT, NetEase, TME-SW (01698.HK)  -0.450 (-0.612%)    Short selling $277.50K; Ratio 3.265%   , and NETEASE MUSIC (09899.HK)  +2.200 (+0.918%)    Short selling $10.62M; Ratio 14.685%   have managed to strike a solid balance between long-term investment and short-term financial health. Remaining broadly upbeat about investments in AI and international expansion, it also views moderate investment and healthy profits as the ideal approach.
(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2025-06-26 12:25.) (Real-time Streaming US Stocks Quote; Except All OTC quotes are at least 15 minutes delayed.)

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