In this article, we will be looking at 5 cheap Chinese stocks to buy now. If you want to read our analysis of China’s economy, go directly to 10 Cheap Chinese Stocks to Buy Now.
5. Lufax Holding Ltd (NYSE:LU)
Stock Price as of May 31: $6.3
Hedge Fund Holders: 12
Lufax Holding Ltd (NYSE:LU) is a financial services provider in China. The company offers multiple services such as credit facilitation and wealth management to affluent investors as well as small business owners. The Institute of Financial Technologists of Asia (IFTA) awarded Lufax Holding Ltd (NYSE:LU) a Platinum Award for Blockchain-based Transformation and Cybersecurity in 2020.
As of September 30, 2021, Lufax Holding Ltd (NYSE:LU) reported 48.7 million registered users and was offering services to 15.3 million active investors. In Q1 2022, Lufax Holding Ltd (NYSE:LU) reported an EPS Normalized Actual of $0.32, beating the analysts’ estimates by $0.01. Moreover, revenue was posted at $2.59 billion, surpassing the consensus estimate by $7.97 million. On May 9, CICC initiated coverage on Lufax Holding Ltd (NYSE:LU) with an Outperform rating and a price target of $7.80.
In Q1 2022, 12 hedge funds held a stake in Lufax Holding Ltd (NYSE: LU).
4. Daqo New Energy Corp. (NYSE:DQ)
Stock Price as of May 31: $48.9
Hedge Fund Holders: 18
Daqo New Energy Corp. (NYSE:DQ) is involved in the production of monocrystalline silicon and polysilicon for use in solar photovoltaic (PV) systems.
The Shihezi, Xinjiang province-based corporation, was upgraded to an Overweight rating on May 4 by Alan Hon at JPMorgan. The analyst also increased the price target on Daqo New Energy Corp. (NYSE:DQ) from $51 to $55. Hon cited valuation and an expectation that there will be a 30% decrease in the cost of PV systems as reasons for the upgrade. Daqo New Energy Corp. (NYSE:DQ) intends to boost shareholder return by either paying out a dividend or repurchasing its shares from the open market. This is because Xinjiang Daqo, an 80% owned subsidiary, announced a dividend in March, which is expected to be received by June this year. Investors are expecting a $2 per share dividend from Daqo New Energy Corp. (NYSE:DQ).
Presently, the shares are trading nearly 48% down from their 52-week high of $90 last May. The overcorrection is due to the recent COVID-19-related lockdown. Daqo New Energy Corp. (NYSE:DQ) stock price is expected to recover following ease in lockdown restrictions.
3. Futu Holdings Limited (NASDAQ:FUTU)
Stock Price as of May 31: $36.71
Hedge Fund Holders: 11
Futu Holdings Limited (NASDAQ:FUTU) is a Hong Kong-based digitalized brokerage and wealth management platform that operates in China, Hong Kong, and the US. Futu is the market leader in providing online brokerage services in China. It offers enormous growth opportunities but has a high regulatory risk associated with it as well.
On May 19, Cindy Wang at China Renaissance assumed coverage on Futu Holdings Limited (NASDAQ:FUTU) stock with a Buy rating. The analyst gave Futu Holdings Limited (NASDAQ:FUTU) stock a price target of $51.80 and appreciated the new paying customer acquisition related to overseas expansion. Wang thinks that this will drive the total value of client assets. The analyst anticipates the firm to capture 20% of the investing population in Singapore through rapid expansion. The stock is a cheaper alternative to a commission-free online trading platform like the Menlo Park, California-based Robinhood Markets, Inc. (NASDAQ:HOOD).
Tao Value shared its insights on Futu Holdings Limited (NASDAQ:FUTU) in its Q1 2021 investor letter. Here’s what the firm said:
“Futu is a new “Opportunistic” position. It is an HK based online brokerage & wealth management platform with deep root in technology. Futu sits in the confluence of 3 strong favorable forces of Meteorology, Topography & Commander, yet was underpriced at the time of our entry. In terms of Meteorology, there is a huge addressable market of Chinese domestic middle to upper classes’ wealth being deployed to overseas assets allocation in the next decade. Additionally, the incumbents being disrupted are extremely weak in their digital transformation. On Topography, Futu’s user-centric product design built an intuitive front end and great user experience, while the digital native development framework built solid & reliable back end (including a self-developed order routing & execution system for HK market). This is a rare combination compared to both offline incumbents (who lack flashy front end & UX) & other new online disrupters (who lack solid infrastructure). On Commander factor, founder CEO Li Hua was a Tencent engineer in its early days with deep knowledge in product design and development. Li is said to be a fanatic product manager, to this day still at the front-line, alpha testing any new features. Based on analyses of these factors, I think Futu could compound its revenue at a very high rate with very high certainty and with strong operating leverage, putting our entry price very attractive compared to earning power in 3-5 years. Yet just as we finished building a small position, the price started to take off and more than tripled in a month. When such price action happens, it is obvious that Mr. Market has turned very euphoric to this name. I decided to trim but kept a reasonable position given its growth certainty.”
Futu Holdings Limited (NASDAQ:FUTU) was held by 11 hedge funds at the end of Q1 2022.
2. NIO Inc. (NYSE:NIO)
Stock Price as of May 31: $17.39
Hedge Fund Holders: 26
NIO Inc. (NYSE:NIO) is a Shanghai-based company that is involved in designing, developing, and manufacturing electric vehicles. The company is known for the breakthrough development of battery-exchange stations for its automobile as opposed to a traditional EV charging station.
Nuying Huang and Yusin Hu at DigiTimes reported on May 31 that the company is looking to establish a production facility in the US. NIO Inc. (NYSE:NIO) is a cheaper alternative to Austin, Texas-based Tesla, Inc. (NASDAQ:TSLA), which is the biggest automobile company in the world in terms of market capitalization. Vijay Rakesh at Mizuho has given the stock a target price of $60 in a research note issued to investors on May 23. The analyst anticipates NIO Inc. (NYSE:NIO) to recover to its pre-lockdown levels by June. Like Tesla, Nio also offers an autonomous driving platform, which is priced at a 40% to 50% discount from the autonomous driving platform offered by Tesla.
As of Q1 2022, NIO Inc. (NYSE:NIO) was held by 26 hedge funds at the end of Q1 2022.
1. Alibaba Group Holding Limited (NYSE:BABA)
Stock Price as of May 31: $96.05
Hedge Fund Holders: 100
Alibaba Group Holding Limited (NYSE:BABA) is a diversified technology company that specializes in e-commerce and is also involved in other businesses related to digital payments, cloud computing, and digital entertainment.
Shyam Patil at Truist reiterated his target price of $185 on Alibaba Group Holding Limited (NYSE:BABA) stock with a Positive rating. The analyst highlighted that the business would face short-term headwinds in the form of macroeconomic uncertainty, regulatory overhang, and the impact of the most recent COVID-19 related lockdowns in China. However, Alibaba Group Holding Limited (NYSE:BABA) has shared that it’s noting ease in challenges related to the supply chain and an improved consumer spending pattern.
Alibaba Group Holding Limited (NYSE:BABA) staged a strong rally in stock price last week after reporting better-than-expected results for Q1 2022 despite the COVID-19 related lockdowns. The company reported revenue of $32.2 billion as opposed to the analysts’ forecast of $29.9 billion. As compared to Amazon, Alibaba Group Holding Limited (NYSE:BABA) is trading at significantly lower multiples, which makes it a cheap stock for investors. Furthermore, the stock gives a significant exposure to the second biggest economy in the world.
Here’s what Baron Funds said about Alibaba Group Holding Limited (NYSE:BABA) in its Q1 2022 investor letter.
“We have eliminated 6 holdings during the first quarter (including) Alibaba. We have sold our Alibaba Group Holding Limited position as the company continues to face competitive challenges and regulatory pressures remain, making it difficult (if not impossible) to appropriately assess the range of outcomes and associated probabilities for the future profitability of the business.”
You can also take a peek at the 10 Best ETFs to Invest In for Retirement and 10 Best Stocks To Buy For Beginners Right Now.
