Goldman Sachs has taken a renewed bullish stance on internet services in China and the opportunities that are available for investors, after six years of showing little interest in the sector.
"For the first time since 2010, we have a high degree of confidence in the long term growth and potential (operating) profit pool for China internet," a team of analysts, led by Piyush Mubayi, said in a research note released on Tuesday.
The bank said the "total addressable market" could involve revenues of approximately $10 trillion by the end of 2020 and an "immense online profit opportunity" of around $70 billion in the same time period if the industry is "run solely to maximize profitability." Sectors include gaming, online advertising, e-commerce, cloud computing and internet finance.
The big names in the report are hardly surprising, with the investment bank singling out major players such as Tencent, Baidu, and Alibaba. Tencent is an internet service provider headquartered in Shenzhen and is the "dominant gaming platform in China," according to the bank. It also has a "powerful social network" asset in Weixin.