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Photographer: Paul Yeung/Bloomberg Photographer: Paul Yeung/Bloomberg

Goldman Sachs Group Inc. was among the many Wall Street banks that missed out on underwriting Alibaba Group Holding Ltd.’s Hong Kong share sale. Now, its analysts are showering China’s largest company with compliments.

Goldman stock analysts just initiated coverage of the shares with a buy rating, predicting they can rally another 31% in the city over the next year. Reasons include its “experienced senior” management team and reach in China’s digital economy.

Alibaba can capture nearly a third of China’s retail payments this year, analysts led by Piyush Mubayi wrote in the report. It also has the potential to surpass core growth, Goldman added.

Shares of the Chinese technology firm rose 2.7% to HK$197.50 on Friday, extending the advance since their Nov. 26 debut to 12%. The company raised about HK$88 billion ($11.2 billion) in its share sale, the biggest equity offering in the financial hub since 2010.

Alibaba may see about $5 billion of mainland inflows over the next three years if it’s included in the trading links with Shanghai and Shenzhen, the bank added.

Some investors have cautioned against unrealistic expectations on the stock, saying certain restrictions may curtail trading in the Hong Kong shares.

Still, Goldman says that around 8% to 10% of Alibaba’s stock should eventually trade in Hong Kong as U.S. investors should be able to convert their American shares into Hong Kong ones and vice versa. The stock could have a free-float market capitalization in the city of about $48 billion.

Analysts at Jefferies Group LLC initiated the stock with a buy rating.

— With assistance by Livia Yap

( Updates prices in fourth paragraph )