According to a recent internet sector strategy report by Caitong Securities analyst Hao Yanhui, identifying stocks with potential short- or long-term earnings surprises or unexpected AI advancements will be a key focus in 2026. The report highlights value investing in Hang Seng Tech as the primary strategy.
Given the volatility in Hong Kong stocks due to market dynamics and short-selling mechanisms, selecting fundamentally strong and sustainable companies is crucial. For 2026, the following stocks are worth watching:
1. **Undervalued or Rebound Potential**: Meituan, XIAOMI-W (positioning for next-gen vehicles), BYD Electronic. 2. **EPS Growth & Valuation Upside**: TENCENT, Trip.com Group, JD Health, LENOVO GROUP. 3. **Self-Sufficient Growth Plays**: Alibaba, Baidu Group, SMIC, Hua Hong Semiconductor. 4. **AI-Driven Opportunities**: Kuaishou, Bilibili, Kingdee International, Horizon Robotics, XPeng, China Literature, NetEase, Sunny Optical, UBTech. 5. **High-Potential Small Caps**: Inspur Digital Enterprise, Heartcore, Mobvista.
**Key Rationales**: - **TENCENT (00700)**: Top pick due to robust research framework and growth prospects. - **Alibaba (09988)**: Leading Chinese asset in the AI tech wave. - **LENOVO GROUP (00992)**: AIPC adoption and profitable server business expected in 2026. - **Trip.com (09961)**: Dual growth drivers—domestic stability and overseas expansion. - **JD Health (06618)**: Consistently outperforming internet healthcare leader. - **Meituan (03690)**: Resilient with competitive inflection potential. - **Kingdee (00268)**: Macro headwinds offset by AI and global expansion. - **XIAOMI-W (01810)**: Clearing negatives with sustained profit resilience. - **SMIC (00981)**: Advancing process technology and yield improvements. - **Hua Hong (01347)**: Profit recovery driven by computing and consumer electronics. - **China Literature (00772)**: IP monetization as core growth lever. - **NetEase (09999)**: Upcoming game launches (e.g., *Infinity* and *Forgotten Sea*) to fuel cycle. - **BYD Electronic (00285)**: Apple foldable phone ramp-up, EV, and data center potential. - **Heartcore (02400)**: Gaming and TapTap platform synergy, overseas expansion.
**Additional Highlights**: Kuaishou (01024), Bilibili (09626), Horizon Robotics (09660), XPeng (09868), Sunny Optical (02382), UBTech (09880), Inspur Digital (00596), Mobvista (01860).