Core Viewpoint - The current valuation of the China Concept Internet Index is at a historical low, with a PE (TTM) of 21.51, indicating potential undervaluation despite a 30% increase year-to-date and an 84.5% rise from last year's low [1][2]. Group 1: Valuation Analysis - The historical PE average from 2017 to 2021 was 60, as companies focused on market expansion, leading to a distorted perception of current low PE values [1]. - The top ten stocks in the index account for 91% of the total, showing a high concentration, with significant valuation disparities among them [3]. - Tencent and Alibaba, which together represent nearly 50% of the index, have PE ratios of 25.2 and 20.3, respectively, significantly lower than comparable international companies like Meta and Amazon [3]. Group 2: Growth and Profitability - Companies like Meituan and Trip.com are experiencing substantial profit growth, with Meituan's net profit expected to surge by 160% in 2024 [3][4]. - Pinduoduo's overseas business is growing rapidly, with GMV increasing over 300% for six consecutive quarters, yet its low PE is attributed to market misconceptions about its business model [3][4]. Group 3: Market Perception and Future Outlook - The market is transitioning from a PS (Price-to-Sales) valuation method to a PE-based approach, reflecting a new phase of profitability realization in the internet sector [4]. - Current market conditions suggest a reasonable valuation range rather than absolute undervaluation, with potential risks tied to external factors like Federal Reserve interest rate hikes [5]. - The valuation recognition battle is characterized by a clash between traditional PE models and the evolving internet business paradigm [5].