ChinaInternetSectorCREDITSuISSE2022Outlook: Finding silver linings11January2022In challenguna timesEquityResearchIChinaKennethFonglvy.JiAshleyXuJasmineWang+85221016395+85221017951+85221017153+85221017181kenneth.kc.fonq@credit-suisse.comivyji@credit-suisse.comjasmine.wang@credit-suisse.comlvyLiuLaurenZuoSophiaTan+85221017103+85221017986+85221017735iv.iu@credt-suisse.comlauren.zuo@credit-susse.comanne Cingof Cosf Suse Secuies(Chia.l.ritn CSS )proidiod ahmiebtatie and other supportin the pmeparaion f this esatchroportthat donot mouire alcose. CSSis aSino-fomigpijoiht onlumbetecerDradit SuiseAG and Fonder Secuties Co, Lt. CSS is notlicersed tb povie seceurties t vestment ad iboy sevice by the Chia SecurtiesRlng./atby Commibsion in the Faople'sRepubilcofChinaDISCLOSUREAPPENDXATTHEBACKOFTHISREPORTCONTANSMPORTANTDISCLOSURES, ANALYSTCERTRICATIONS LEGAL ENTITYDISCLOSUIREANDTHESTATUS OFNONJSANALYSTS. US Dlecbsure Credit Sulsse doesand seeks to do boushes with companles copved Ih its research reports. As aresut, Investors shauldconflict of interest that could affect the objectivity of this report.Inwestorsshould co
ChinaInternetOutlook2022Table of contentsExecutive summary142到5996Key themesworthmonitoringin2022#Growth: Transitioning from user growth to operational optimisationRegulation:Focus on implementationEcosystem:Inter-connectivityenteringthenextphaseCompetitive landscape;Leveling the playing fieldInvestm ent focus;Hard technology, overseas market and shareholder retumsEarnings:Consenses earnings may still see meaningful adjustment.Subsectoroutlook4即7Onlinegames:Opportunities stillexistin the newnormaE-commerce:Opportunities may arise in 2H22Advertising:SlayselectiveasmacroweighsdemandLocalservices:Weaknear-termvisibity despite penetration potential100Education: Vocational education riding on policy tailwinds108Travel; The eventualrecoverycould be on the horizonOnlineEntertainment:Long tunnelbefore lightStock imolicationsStockpicks:Tencent. NetEase,Kuaishou, PDD,JOYY, Trip.com135Nate:Share price and mkt capin this eport are based on maket dose of Jan 5, 2022.CReditSuissea11January2022
ChinaInternetOutlook2022Focus tablesAssessingourstockpicks'exposureto 6keythemesin2022RegulatoryInterconnectivityCompetitiveEarningValuationGrowthimpactbenefitlandscapeupsideattractivenessTencent文☆食☆攻☆食☆NetEase☆☆☆食☆女☆☆☆☆食☆食☆Kuaishou☆☆食☆文☆☆☆PDD文文女☆☆☆☆JOYY2文☆楼文☆文☆☆☆Trip.com文☆☆☆☆☆☆-high/favorable;xx=moderate:xt=low/unfavorableValuation sheet of our stockpicksMarketCapPrlooTargetPriceUpsldePIEX)PEGK)PISCEV/EBITDA()CampanyRating(USSen)toca)(Local)（3）2021E2022E2023E2021E2022E2021E2022ETencent530.7430.6615.043%26.9x23.4x1.3x6.1x5.2x15.8x19.2x00000PDD59.548.586.077%42.2x25.9x0.1x4.5x3.841.4x20.6xNetEase64.1
Executive summaryFindina silver linings in challenging timesChinaInternetSector:Review,outlook and kevthemesInternet sector corrected 39% in 2021: The multfiple de-rating due to requlatory scrutiny that structurally lowered the sector'srelurnaswellaseamingsdowngrade amid a weakmacro environmentin 2H21,causedasharpsectorcorrection.Sector outlook: ...
