In this article, we will be looking at 10 cheap Chinese stocks to buy now. If you want to skip our analysis of China’s economy, go directly to 5 Cheap Chinese Stocks to Buy Now.
China’s Premier Li Keqiang recently offered a dire warning about the status of China’s economy, briefing over 100,000 executives in a statewide video conference that they had to accelerate development, cut unemployment rates, and ensure the summer grain harvest as soon as possible. However, the central government’s lack of tangible new measures and the event’s lack of official media coverage shows that the economic crisis sparked by President Xi Jinping’s contentious zero-Covid policy is not ending soon. Over the last three months, the plan has brought business activity to a standstill in dozens of locations. China’s GDP fell 6.9% YoY in the first quarter of 2020. This was the first official yearly decline in over 40 years.
However, as Beijing and the financial center Shanghai lifted strict COVID-19 controls, Chinese equities gained on May 30. The consumer and tourism stocks drove the gains as investors anticipated a return to normalcy. The Shanghai Composite Index rose 0.6% to 3,149.06 points, while the blue-chip CSI300 index rose 0.7% to 4,029.02 points. The China Equity Strategist at UBS Securities, Meng Lei, commented that “given the recent increase in macro-policy support and the relatively loose macro liquidity conditions, we believe market valuation has bottomed for the year.”
According to Amundi SA, Europe’s biggest asset manager, investors can expect Chinese equities to outperform as positive catalysts approach. According to Vincent Mortier, Amundi’s chief investment officer, the firm is becoming more positive about the country’s stock market after cutting exposure during the first quarter’s sharp selloff. He added that the prospective release of an indigenous mRNA Covid-19 vaccine, as well as any reopening measures made around the Party Congress, are two key things to keep an eye on.
Moreover, analysts at JPMorgan Chase have approved a number of Chinese internet firms that were previously labeled “uninvestable,” signaling a substantial shift in opinion about the industry. On May 16, Alex Yao and his colleagues upgraded seven stocks from Underweight to Overweight. These stocks were assigned underweight ratings earlier in March. A number of other Chinese companies were also upgraded to Neutral by JPMorgan. Some popular stocks such as Alibaba Group Holding Limited (NYSE:BABA), Pinduoduo Inc. (NASDAQ:PDD), and JD.com, Inc. (NASDAQ:JD) were also upgraded.
Our Methodology
Companies that trade on the US stock markets but are based in China have been included in this list. We have analyzed earnings reports, business fundamentals, analyst ratings, and hedge fund holdings for each company. Over 912 elite hedge funds were tracked by Insider Monkey at the end of Q1 2022 to analyze the hedge fund sentiment.
Cheap Chinese Stocks to Buy Now
10. Bilibili Inc. (NASDAQ:BILI)
Stock Price as of May 31: $22.35
Hedge Fund Holders: 24
Bilibili Inc. (NASDAQ:BILI) is a Shanghai-based video-sharing website that is themed around animation, comics, and games (ACG). The users have the option to submit videos, view them, and add their commentary on them as well. It is a video platform that is engaging the Gen Z demographics and offers numerous types of revenue streams in the form of advertisements, live streaming, and subscriptions.
On May 25, Elinor Leung at CLSA maintained an Overweight rating on Bilibili Inc. (NASDAQ:BILI) stock with a price target of $25.30. The analyst anticipates weak Q1 2022 results and expects the growth of advertisement revenue to decelerate to 30% YoY. In a research note issued to investors, the analyst highlighted that the e-commerce sector and the advertising industry have come under pressure due to the latest round of COVID-19 related lockdowns across China. However, Bilibili Inc. (NASDAQ:BILI) has been on a stellar growth path as it has compounded its growth annually by 35% to reach 272 million daily active users (DAUs) as of Q4 2021.
Bilibili Inc. (NASDAQ:BILI) was mentioned in the Q3 2021 investor letter of Tao Value. Here’s what the firm said:
“As witnessed in the past quarter, the government intervention in Chinese private sector is elevated to an unprecedented level. Given this background, I thoroughly reviewed all our Chinese holdings and made a few changes. We also exited Bilibili (ticker: BILI), given its priced-in valuation in the context of Chinese ADR confidence loss.”
Bilibili Inc. (NASDAQ:BILI) was held by 24 hedge funds at the end of Q1 2022. Yiheng Capital was the leading investor in Bilibili Inc. (NASDAQ:BILI), with a stake worth over $239 million.
9. KE Holdings Inc. (NYSE:BEKE)
Stock Price as of May 31: $12.88
Hedge Fund Holders: 34
KE Holdings Inc. (NYSE:BEKE) is a China-based corporation that specializes in real estate transactions and similar services in three primary segments. KE Holdings Inc. (NYSE:BEKE) facilitates transactions related to leasing and sale of existing houses, and transactions related to sales of new houses for real estate developers. Moreover, the company’s ‘emerging and others’ segment is involved in financial services.
KE Holdings Inc. (NYSE:BEKE) reported an EPS Normalized Actual of $0.07 for Q1 2022, beating the analysts’ estimates by $0.01. Revenue for the quarter was reported at $2.82 billion, surpassing analysts’ estimates by $300.95 million.
On May 16, KE Holdings Inc. (NYSE:BEKE) was upgraded from an Underweight to a Neutral rating at JPMorgan. The analyst also raised the price target on KE Holdings Inc. (NYSE:BEKE) from $7.50 to $13.50. Alex Yao shared that the ‘significant uncertainty’ surrounding China’s internet sector has reduced following recent changes in certain regulations.
Investment management firm TAO Value mentioned KE Holdings Inc. (NYSE:BEKE) in its Q3 2021 investor letter. Here’s what the firm said:
“As witnessed in the past quarter, the government intervention in Chinese private sector is elevated to an unprecedented level. Given this background, I thoroughly reviewed all our Chinese holdings and made a few changes. We exited KE holdings (ticker: BEKE), for high potential regulatory risk and the passing of the visionary founder & CEO Zuo Hui (who was a core tenet of our original thesis).”
KE Holdings Inc. (NYSE:BEKE) was held by 34 hedge funds at the end of Q1 2022.
8. Vipshop Holdings Limited (NYSE:VIPS)
Stock Price as of May 31: $9.36
Hedge Fund Holders: 20
Vipshop Holdings Limited (NYSE:VIPS) was founded in 2008 and is involved in the online sale and distribution of goods for various brands. The company has agreements with domestic and international brands to sell items ranging from apparel to lifestyle products.
In Q1 2022, Vipshop Holdings Limited (NYSE:VIPS) posted an EPS Normalized Actual of $0.31, beating the analysts’ estimates by $0.03. Although the company was impacted by the supply-chain disruptions due to Covid-19, it managed to increase its gross profit margin from 19.7% to 19.8% in the first quarter of 2022.
Vipshop Holdings Limited (NYSE:VIPS) was mentioned in the Q3 2021 investor letter of Insider Monkey. Here’s what the investment management firm said:
“Vipshop Holdings ADR (China) offers a differentiated value proposition to its customers via its online product sales and distributions services. We like that the business model is asset-light due to inventory being predominantly on consignment and logistics outsourced to a third party. We believe the company should generate meaningful free cash flow moving forward.”
As of Q1 2022, Vipshop Holdings Limited (NYSE:VIPS) was held by 20 hedge funds.
7. Dada Nexus Limited (NASDAQ:DADA)
Stock Price as of May 31: $7.63
Hedge Fund Holders: 10
Dada Nexus Limited (NASDAQ:DADA) offers a platform for local on-demand shopping and distribution. It administers Dada Now, a domestic on-demand delivery network for chain merchants as well as small and medium-sized enterprise owners.
On May 16, Andre Chang at JPMorgan upgraded Dada Nexus Limited (NASDAQ:DADA) from Neutral to an Overweight rating. The analyst also increased the price target on Dada Nexus Limited (NASDAQ:DADA) from $7.50 to $10. Following regulatory announcements, Chang expects “early-cycle sectors such as digital entertainment, local service, and e-commerce to be the first batch of outperformers.” In March, Ashley Xu at Credit Suisse also opined that Dada Nexus Limited (NASDAQ:DADA) could support its growth in the future due to its stable liquidity position.
In Q1 2022, Dada Nexus Limited (NASDAQ:DADA) reported an EPS GAAP Actual of -$0.37, which was in line with the analysts’ estimates. Meanwhile, the company posted revenue of $298.45 million, surpassing consensus estimates by $2.15 million.
Of the 912 hedge funds in Insider Monkey’s database, Dada Nexus Limited (NASDAQ:DADA) was held by 10 hedge funds at the end of Q1 2022.
6. MINISO Group Holding Limited (NYSE:MNSO)
Stock Price as of May 31: $5.49
Hedge Fund Holders: 10
Based in Guangzhou, China, MINISO Group Holding Limited (NYSE:MNSO) was founded in 2013. It is an investment holding company selling lifestyle items to consumers in China, the United States, Asia, and Europe. The firm sells items in a variety of categories, including home décor, cosmetics, and fragrances. MINISO Group Holding Limited (NYSE:MNSO) also operates TOP-TOY, which sells a variety of popular toys. As of June 30, 2021, the company has a network of around 4,749 MINISO shops, along with online sales outlets.
For the third fiscal quarter of 2022, MINISO Group Holding Limited (NYSE:MNSO) posted revenue of RMB2.34 billion, reflecting an increase of 5% year on year. Furthermore, TOP-TOY’s revenue nearly quadrupled year on year. The company’s CEO stated that despite ongoing challenges related to Coivd-19 lockdowns and supply-chain disruptions, MINISO Group Holding Limited (NYSE:MNSO) delivered a strong quarter, and the business model demonstrated resilience. The company’s overseas operations also saw a recovery in the recent quarter.
Hillhouse Capital Management was the leading hedge fund investor in MINISO Group Holding Limited (NYSE:MNSO) in Q1 2022. Overall, 10 hedge funds reported owning a stake in the company.
In addition to MINISO Group Holding Limited (NYSE:MNSO), stocks such as Alibaba Group Holding Limited (NYSE:BABA), Pinduoduo Inc. (NASDAQ:PDD), and JD.com, Inc. (NASDAQ:JD) are some of the popular Chinese stocks attracting hedge fund investment.
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Disclose. None. 10 Cheap Chinese Stocks to Buy Now is originally published on Insider Monkey.
