(Bloomberg) -- Investors bargain hunting in China’s beaten-down market may bypass ultracheap shares of JD.com Inc. until the e-commerce firm can prove success overseas. 

The company’s latest plan to seek growth abroad through the possible acquisition of British electronics retailer Currys Plc. is meeting with skepticism. Meanwhile, its efforts to revitalize slumping domestic sales have borne little fruit amid weak Chinese consumer spending and brutal competition.

The stock slipped 1.9% this week in Hong Kong, among the worst performers on Hang Seng Index, as the market balked at the prospect of a bidding war with Elliott Investment Management LP for Currys. Despite a recent relief rally, JD.com is still down nearly 50% over the past year, compared with a loss of around 20% in rival Alibaba Group Holding Ltd. and a more than 50% surge in Temu-owner PDD Holdings Inc. 

Read More: Currys’ Largest Investor Backs Move to Reject Elliott Offer

“As a smaller player relative to Alibaba and PDD in terms of global gross merchandise value, JD.com would need to show stronger growth than these two peers to revive investment appetite into the stock,” said Catherine Lim, Bloomberg Intelligence analyst. 

On the plus side, JD.com’s valuation multiple has dropped more than any major Chinese technology stock’s apart from troubled Meituan over the past year, according to data compiled by Bloomberg. It’s now one of the cheapest among peers, at about 8 times forward earnings estimates. The question is whether that’s enough reason to buy it.

The stock has suffered from intense competition with Alibaba and new entrants including ByteDance Ltd.’s Douyin Mall. That combined with China’s stubborn deflation and declining wages have driven a price war that is being won by discounters like PDD. 

The overseas front of the e-commerce battle is equally challenging, with Chinese competitors Alibaba, Shein and Temu building presences alongside Amazon.com Inc. In contrast to the asset-light model employed by rivals, JD.com has opted to spend heavily on building its own logistics network, triggering worry about its ability to pay shareholder returns.

Further exacerbating cost issues, Bloomberg Intelligence’s Lim sees a risk that a fight over Currys could make the acquisition “pricey”. She also notes concern that JD.com may “struggle to create synergies” with the British retailer.

“JD.com’s business model has very thin margins and it only works because of scale,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “Reproducing this model in UK will have its challenges, as fulfillment services are unlikely to be as cheap and efficient as in China.”

JD.com has also been aggressively spending at home to subsidize merchants and customers on its online retail site in order fend off rivals. The company’s outlays have done little to help increase its market share. In fact, its revenue growth has slowed, lagging that of its key peers for the past few quarters.

For JD.com’s valuation to rebound, it “needs to show the market all the investments done last year are likely to generate good returns, which can be demonstrated by a reacceleration in its e-commerce growth in the China market,” said Jialong Shi, an analyst at Nomura International HK Ltd.

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(Updates with share performance in the third paragraph.)

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