Morgan Stanley: prefers MEITUAN-W (03690) and TENCENT (00700) over Alibaba-SW (09988) in the e-commerce sector.

Morgan Stanley released a research report stating that in the case of weak consumption, they are cautious about the growth of Gross Merchandise Value (GMV) in the industry, but they are optimistic about stabilizing Alibaba-SW (09988) market share through improving value products, the maturity of live e-commerce, and further penetration into lower-tier cities by integrating WeChat Pay. Morgan Stanley forecasts that Alibaba's GMV will grow by 6% and 5% in the second and third quarters, respectively. At the same time, they expect that Alibaba's Customer Management Revenue (CMR) growth in the second and third quarters will improve to 3% and 5% respectively. The bank stated that competition is the most concerning issue for Morgan Stanley regarding Alibaba and the entire e-commerce sector. Morgan Stanley believes that due to slowing growth and intense competition, Alibaba's valuation should be lower than other Chinese internet peers. Alibaba's 2026 PE ratio is 7-8 times, while Pinduoduo/JD.com-W (09618) have PE ratios of 8/7 times for 2025, TRIP.COM-S (09961) is 11 times, TENCENT (00700) is 12 times, and MEITUAN-W (03690) is 13 times. Morgan Stanley believes that there is limited room for multiple revaluations, although an overall capital return rate of 9%-10% should provide downside support.