Credit Suisse Analyst: China Internet Investors To See FY15 Gains

Chinese Internet investors will benefit from mergers, mobile advertising and the newly minted banking licenses, an analyst said Wednesday.

Credit Suisse's Dick Wei generally likes the look of about 30 companies in the sector, but said instead of thematic investment, stock selection will become increasingly important.

Wei's top large-caps picks: Baidu Inc (ADR) (NASDAQ: BIDU) and Tencent Holdings (OTC: TCEHY).

Among smaller players, Wei likes YY Inc (ADR) (NASDAQ: YY), 58.com Inc (ADR) (NYSE: WUBA) and NetEase, Inc (ADR) (NASDAQ: NTES).

Wei also upgraded the online travel concern Tuniu Corp (NASDAQ: TOUR) to Outperform, from Neutral and game maker Igg Inc to Neutral from Underperform.

Although Credit Suisse's China Internet Index was up 20 percent last year, in line with the Nasdaq Composite, the measure is 80 percent weighted to Alibaba Group Holding Ltd (NYSE: BABA), Baidu and Tencent.

Excluding the 'Big Three,' the measure actually fell 5 percent.

Qihoo 360 Technology Co Ltd (NYSE: QIHU), Sina Corp (NASDAQ: SINA) and Sohu.com Inc (NASDAQ: SOHU) saw particularly painful declines.

In spite of a slowdown in the Chinese economy, Wei expects investor interest to likely come back to the sector in 2015 with the emergence of new business models.

Those new models include banking and so-called online-to-offline marketing, which aims to drive online consumers to brick-and-mortar stores, Wei said.