Furui: The internet industry is at the beginning of a new cycle with three main characteristics. Scientific enterprises will take the lead.

The investment atmosphere of Chinese internet companies has improved. Zhuang Yaohong, Managing Director of the Internet and Media Industry Research Department of Fugui Asia-Pacific, stated that the internet industry is entering a new cycle with potential for profit growth. Market leaders and companies benefiting from policies are starting to use the Price/Earnings to Growth ratio (PEG) valuation method, driving stock prices to break through. Zhuang Yaohong pointed out that in the past few years, the valuation of internet companies was mainly based on Price/Earnings (PE) ratio, ranging from 8 to 16 times. Recently, the valuation of some companies has significantly exceeded this range, including local services like Meituan (03690), tourism like Trip.com Group Ltd. Sponsored ADR (09961), vertical fields like KE Holdings, Inc. Sponsored ADR Class A (02423), Kanzhun Ltd. Sponsored ADR (02076), and Full Truck Alliance Co. Ltd. Sponsored ADR (YMM.US). These companies have maintained profit growth, market leadership, and sensitivity to policies. The market is starting to evaluate these stocks using PEG, leading to a rise in stock prices. Regarding the question of whether valuations have reached a peak, Zhuang Yaohong believes that the market has not seen a large-scale increase in profit forecasts or premiums, indicating that there is still room for valuation adjustment. Zhuang Yaohong also stated that the recent stabilization of the internet sector reflects the market's observation of policy trends, and price fluctuations in a new cycle are normal. Major e-commerce platforms are once again entering the Double Eleven promotion season. Zhuang Yaohong said that this year's activities feature more direct subsidies, longer promotion periods, and close attention to the integration of Alibaba's Taobao and Tencent's WeChat Pay. This integration is expected to bring in more users for the former. Zhuang Yaohong also predicted that China's policy of trading in old appliances for new ones will boost the overall performance of the home appliance industry. Zhuang Yaohong believes that the focus of e-commerce platforms is shifting from absolute low prices to improving user service. Past price competition was not healthy and even led to vicious competition. The shift in focus towards Gross Merchandise Volume (GMV) will be a long-term trend for the industry's development.