SHANGHAI (BLOOMBERG) - Goldman Sachs Group was among the many Wall Street banks that missed out on underwriting Alibaba Group Holding's Hong Kong share sale. Now, its analysts are showering China's largest company with compliments.

Goldman Sachs stock analysts just initiated coverage of the shares with a buy rating, predicting they can rally another 30 per cent 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 2.8 per cent to HK$197.80 (S$34.40) on Friday morning, extending the advance since their Nov 26 debut to 12 per cent. The company raised about HK$88 billion in its share sale, the biggest equity offering in the financial hub since 2010.

Alibaba may see about US$5 billion (S$6.8 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 of the stock, saying certain restrictions may curtail trading in the Hong Kong shares.

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

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