In this article, we discuss the top Chinese companies on NASDAQ.
There were 261 Chinese firms listed on the three largest US exchanges, namely the New York Stock Exchange, NASDAQ, and NYSE American, as of March 31, 2022. The combined market valuation of these companies is $1.3 trillion. Eight of these businesses are state-owned firms at the national level (SOEs).
On June 7 after the Wall Street Journal reported that the Chinese regulatory authorities had concluded the yearlong investigation into the business of ride-hailing giant DiDi Global Inc. (NASDAQ:DIDI) and two other companies, namely Full Truck Alliance Co. Ltd. (NYSE:YMM) and Kanzhun Limited (NASDAQ:BZ). Furthermore, all these companies have been allowed to add new users on their respective platforms and thus would start to appear on app stores across China in the coming days. This has increased the confidence of other Chinese internet companies as they anticipate ease in the crackdown. The development will help remove the overhang on numerous stock prices. Stocks such as Baidu, Inc. (NASDAQ:BIDU), JD.com, Inc. (NYSE:JD), and Bilibili Inc. (NASDAQ:BILI) are a few of the most popular Chinese companies among the hedge funds.
We have not included DiDi Global in our list of the top Chinese Companies on NASDAQ because the company has filed the necessary papers with the US Securities and Exchange Commission (SEC) for a delisting. The Beijing-based company intends to list on the Hong Kong Stock Exchange once the delisting process from the US is complete.
Pixabay/Public domain
Our Methodology
In this article, we will take a look at the top Chinese companies listed on the NASDAQ. We have picked the companies after an analysis of their earnings reports, analyst ratings, and growth prospects. In addition to this, a database of 912 hedge funds tracked by Insider Monkey, as of Q1 2022, was used to provide the hedge fund sentiment on each stock.
Top Chinese Companies on NASDAQ
10. Pinduoduo Inc. (NASDAQ:PDD)
Number of Hedge Fund Holders: 36
Pinduoduo Inc. (NASDAQ:PDD) is a Shanghai-based mobile-only platform that brings together millions of farmers and distributors directly to consumers across China. The platform is designed to bring more people into the digital economy. The scale of the platform can be gauged by the fact that there are 700 million monthly active users (MAUs) using this application.
Pinduoduo Inc.’s core business is compounding annually by 25%. The stock is trading at a P/E multiple of 20 times compared to its GAAP EPS. This is an attractive valuation for a firm that is in the growth stage. Pinduoduo Inc. had to resort to merchandising business during the COVID-19 pandemic to sustain its operations. However, as the Chinese economy is opening up, the company is abandoning the merchandise business. Q2 2022 will be the first complete quarter with negligible merchandise sales.
Pinduoduo Inc. provides a unique shopping experience where users come together on social media and discuss the products that they want to buy as a group. Buying the product together reduces the average price of the purchase and makes it more affordable for the users.
Pinduoduo Inc. posted strong Q1 2022 results. The company posted revenue of $3.55 billion, surpassing the consensus estimates by $473.2 million. Excluding merchandise sales, Pinduoduo Inc.’s revenue increased by 39% year on year. The company also beat the EPS Normalized Actual estimate for the quarter by $0.17.
Pinduoduo Inc. was mentioned in the Q4 2021 investor letter of Tao Value. Here’s what the investment management firm said about the company:
“On the detracting side, one of our largest detractors includes Pinduoduo (ticker: PDD). Pinduoduo (PDD) reported the second consecutive GAAP profit quarter yet missed on the revenue due to nation-wide consumption weakness & scaled back Sales & Marketing efforts. Market disliked it and the stock price plunged on the earnings. In my opinion, the accounting profits proved the original thesis of using S&M to acquire users and using great shopping experience to keep them. After realizing the first growth curve, Pinduoduo now shifted its focus & investment to agriculture. It is still very early, but the reduced size due to price drop warrants a position to watch and continue grow with such a team with strong culture.”
As of Q1 2022, Pinduoduo Inc. was held by 36 hedge funds.
9. NetEase, Inc. (NASDAQ:NTES)
Number of Hedge Fund Holders: 29
NetEase, Inc. (NASDAQ:NTES) is a Guangzhou-based provider of self-developed PC and mobile games to users around the world. The company also provides communication, community, and commerce services. NetEase, Inc. was founded in 1997 and has been listed on the NASDAQ since 2000.
In a note issued to investors on May 25, Charlene Liu at HSBC maintained a Buy rating on NetEase, Inc. stock with a price target of $122. NetEase, Inc. has seen its revenue compound annually by 25%, from $3.6 billion in 2015 to $13.6 billion in 2021. The overhang on the stock due to regulatory challenges and the economic slowdown due to COVID-19-related lockdowns is lifting slowly. Furthermore, NetEase, Inc. is also expanding its operations and catering to the market in Japan and North America. The business is shielded from a slowdown in economic activity, and the core gaming business could offer upside to investors from overseas markets.
In Q1 2022, NetEase, Inc. recorded an EPS Normalized Actual of $1.16, beating the analysts’ estimates by $0.08. Revenue was recorded at $3.54 billion, surpassing the consensus estimate by $71.01 million.
Of the 912 hedge funds in Insider Monkey’s database, 29 funds held a stake in NetEase, Inc. as of Q1 2022.
8. Trip.com Group Limited (NASDAQ:TCOM)
Number of Hedge Fund Holders: 32
Trip.com Group Limited (NASDAQ:TCOM) is a diversified online travel company that provides a range of services like hotel and airline reservations, transportation ticketing, packaged tours, and corporate packages. The platform has 1.2 million hotels listed across 200 countries, along with 30 million real guest reviews. Along with the namesake, some of the other notable travel partner brands of the company are Ctrip, Skyscanner, and Qunar. The acquisition of Skyscanner and Qunar is relatively fresh and is anticipated to provide synergies to the firm.
Trip.com Group Limited is now targeting the international markets as travel activity is expected to recover once the COVID-19-related restrictions are lifted. The global travel booking industry is expected to compound by 12.2% annually between 2021 and 2028. Meanwhile, the Chinese online travel booking industry grew by nearly 21% in 2019, just before the COVID-19 pandemic. Trip.com Group Limited is also working on developing artificial intelligence-based solutions to assess travel-related data. In Q1 2022, Trip.com Group Limited recorded an EPS Normalized Actual and revenue of $0.08 and $734.72 million, respectively. Both the figures surpassed the analysts’ estimates.
In its Q3 2021 investor letter, Oakmark Funds shared its insights on Trip.com Group Limited. Here’s what the firm said:
“Trip.com Group ADR (China), the largest online travel agency in China, and Reckitt Benckiser Group (U.K.), a large global consumer products company, were both previous holdings in the Fund. With significant declines in share price, the stocks again offered the necessary potential upside to be selected for our portfolio.”
At the end of Q1 2022, Trip.com Group Limited was held by 32 hedge funds.
7. BeiGene, Ltd. (NASDAQ:BGNE)
Number of Hedge Fund Holders: 15
BeiGene, Ltd. (NASDAQ:BGNE) is a Chinese biotech company specializing in the creation of drugs for the treatment of cancer. The company has taken necessary actions to secure its listing on the US markets, which has come under serious threat due to the tensions between the US and China. BeiGene, Ltd. swapped its Chinese auditors with US-based auditors to comply with the rules of the US Securities and Exchange Commission (SEC). The delisting rules apply when the Chinese law prevents local auditing firms from sharing their documents about a foreign-listed Chinese company with an overseas regulator like the SEC. The US and the Chinese government are working closely on devising a framework to provide SEC with the required data. If an agreement is not reached, nearly 300 Chinese companies listed in the US would have to get delisted.
On May 17, BeiGene, Ltd. announced the inauguration of a regional office in Switzerland. The company has successfully built a European organization comprising clinical and commercial teams. The new office has been built to serve as a hub for BeiGene, Ltd.’s activities in that region.
In Q1 2022, BeiGene, Ltd. posted an EPS GAAP Actual of -$4.24, beating the analysts’ estimates by $1.08. Moreover, the company posted revenue of $306.63 million, surpassing the consensus estimate by $46.25 million. BeiGene, Ltd. has seen its revenue grow at a rate of 42% per year over the last half-decade.
BeiGene, Ltd. was held by 15 hedge funds as of Q1 2022.
6. Kanzhun Limited (NASDAQ:BZ)
Number of Hedge Fund Holders: 20
Kanzhun Limited is one of the three companies that have been directly impacted by the news from the Wall Street Journal stating that the Chinese authorities have stopped their investigation into the operations of certain firms. The company operates an online recruitment platform by the name of BOSS Zhipin. The platform connects potential employers with job seekers through its highly interactive mobile app.
On June 6, Eddy Wang at Morgan Stanley reiterated an Overweight rating on Kanzhun Limited with a price target of $35. Wang credited the Wall Street Journal report for its positive outlook on Kanzhun Limited. The analyst stated that the company would now be able to resume the registration of new users, which is the primary growth driver for Kanzhun Limited. Wang termed Kanzhun Limited’s stock as the firm’s “top pick in China’s Internet vertical segment.”
The number of hedge funds having a stake in Kanzhun Limited increased by four on a sequential basis from 16 in Q4 2021 to 20 as of Q1 2022. Amongst the 20 hedge funds, the biggest stake in the company is held by Chase Coleman’s and Feroz Dewan’s Tiger Global Management LLC. The hedge fund increased its holding in Kanzhun Limited stock by more than 594% on a sequential basis and made it the 30th biggest holding in its portfolio.
In addition to Kanzhun Limited, stocks such as Baidu, Inc., JD.com, Inc., and Bilibili Inc. are also among the top Chinese Companies on NASDAQ.
5. Li Auto Inc. (NASDAQ:LI)
Number of Hedge Fund Holders: 28
Li Auto Inc. (NASDAQ:LI) is a Chinese electric vehicle company with its headquarters in Beijing and production facilities in Changzhou. The company delivered 11,496 Li One’s in May, reflecting an increase of 165.9% YoY. Since its debut in 2019, Li Auto Inc. has delivered 171,467 vehicles.
On May 10, Ming Hsun at Bank of America gave Li Auto Inc. a Buy rating with a price target of $33. In a report issued to investors, the analyst highlighted that Li Auto Inc. stock is a Buy because of the solid new model pipelines. Hsun also warned that there is uncertainty due to the consumption power of the batteries and the supply chain-related challenges. In Q1 2022 results, Li Auto Inc. reported defensive margin trends and a stable free cash flow.
Li Auto Inc. was held by 28 hedge funds as of Q1 2022.
4. Huazhu Group Limited (NASDAQ:HTHT)
Number of Hedge Fund Holders: 27
Huazhu Group Limited (NASDAQ:HTHT) is a Chinese fast-growing multi-brand hotel group that operates 6,187 properties spread across 16 countries as of June 30, 2020. The company has been ranked number seven in the hotel group.
On June 1, Fawne Jiang at Benchmark gave Huazhu Group Limited a price target of $40 and maintained a Buy rating on the stock despite the company reporting mixed Q1 2022 results and expecting Q2 to be difficult. All these developments have already been factored into the stock price. In a note issued to investors, Jiang acknowledged that Huazhu Group Limited is facing near-term headwinds due to COVID-19-related disruptions. However, in his opinion, the company has the potential to become a leader in the hotel industry and a consolidator once the COVID-19-related concerns are addressed.
Huazhu Group Limited was held by 27 hedge funds as of Q1 2022.
3. Bilibili Inc. (NASDAQ:BILI)
Number of Hedge Fund Holders: 24
Bilibili Inc. is a Shanghai-based video streaming platform that started as a focal point for Animation, Comics, and Games (ACG) but has now pivoted as a pan-entertainment provider and includes content related to anime, education entertainment, games, knowledge, lifestyle, and technology.
It is the most preferred video streaming platform amongst Gen-Z in China, with 78% of the users under the age of 35. The monthly active users (MAUs) for Bilibili Inc. stood at 272 million during FY21. Meanwhile, the average time spent on this platform was one hour and 22 minutes. The number of average monthly active content contributors was recorded at 2.7 million, signifying a 62% YoY increase. Some experts call Bilibili Inc. the answer to YouTube in China as it generates revenue from a wide range of sources.
Here’s what Tao Value said about Bilibili Inc. in its Q3 2021 investor letter:
“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. was held by 24 hedge funds as of Q1 2022.
2. JD.com, Inc. (NYSE:JD)
Number of Hedge Fund Holders: 59
Headquartered in Beijing, JD.com, Inc. is one of China’s leading e-commerce retailers. In terms of revenue, it is the third-largest internet company in the world.
To serve over 300 million customers, JD.com, Inc. operates its national logistics network, which allows the company to deliver up to 90% of orders within a day. JD.com, Inc. claims to have the most dependable delivery service amongst the major e-commerce companies in the world.
On May 19, Shyam Patil at Susquehanna gave a Neutral rating on JD.com, Inc. stock. Even though the analyst lowered the price target from $66 to $55, he presented a positive opinion on JD.com, Inc.’s positioning in the expanding Chinese e-commerce segment. Patil appreciated the company’s efficiency in incubating new businesses and believes that the company’s “hybrid 1P/3P model is attractive.”
In Q1 2022, JD.com, Inc. posted an EPS Normalized Actual of $0.38, beating the analysts’ estimates by $0.13. Moreover, the company surpassed the revenue estimates by $850.7 million.
Here’s what Argosy Investors said about JD.com, Inc. in its Q3 2021 investor letter:
“We sold JD as a result of the furor over Chinese stocks during the quarter. We had been concerned about China’s lack of respect for investor rights for some time, and Beijing has become significantly more aggressive in asserting itself of late. In addition, the legal structure Chinese companies use to come public in the U.S., a Cayman Islands shell corporation leaves American investors with an unsure path to recovering value should these companies cease to trade on U.S. exchanges. Because of the uncertainty, we exited our position in JD completely. We still love JD’s long-term prospects, but we cannot estimate the legal/regulatory risk associated with these companies anymore. More broadly, we are freeing up cash for some other positions we already own which have declined in this market, and after additional review, remain attractive.”
As of Q1 2022, JD.com, Inc. was held by 59 hedge funds.
1. Baidu, Inc. (NASDAQ:BIDU)
Number of Hedge Fund Holders: 47
Baidu, Inc. is a multinational technology corporation based in Beijing’s Haidian District. The company specializes in Internet-related services as well as artificial intelligence.
On May 31, Shyam Patil at Susquehanna maintained a Positive rating on Baidu, Inc. stock with a price target of $200. The analyst stated that even though the company is facing near-term headwinds, its AI business is still strong. In Q1 2022, Baidu, Inc. recorded an EPS Normalized Actual of $1.67, surpassing the analysts’ estimates by $0.83. Moreover, revenue was posted at $4.22 billion, beating the analysts’ estimates by $58.95 million.
Baidu, Inc. was mentioned in the Q3 2021 investor letter of Harding Loevner. Here’s what the investment management firm said:
“In contrast, Baidu undertook and is now emerging from a much needed branching out from its original business of internet search, which has faced waves of regulatory threats and ferocious competition from other new online ad formats. Over the past several years it has invested heavily in the next longterm growth opportunities in Al, what it sees as its real core competency. After racking up over 12 million kilometers (7.5 million miles) of testing, Baidu’s autonomous driving system (ADS), Apollo, is now being deployed on certain less congested designated parts of the cities. In July, it introduced its robo-taxi services, Apollo Go, in Guangzhou (pop. 15 million), the fourth city where the service has launched, and it expects to roll out to 30 more cities over the next three years. Several Chinese carmakers such as Great Wall have announced plans to integrate Baidu’s system into their vehicles. Baidu’s Al initiatives should be viewed favorably by regulators because they align with overarching central government objectives around technology leadership and
reducing carbon emissions.Baidu’s technological innovation in internet search, Al, and ADS are made possible by accelerating advancement in semiconductors, a trend of considerable significance to our portfolio. The broad adoption of the internet of things (loT) and fifth-generation (5G) mobile networks, the growing importance of Al and machine learning applications, and the mass uptake of electric vehicles (EVs)—all enabled by advanced semiconductors—are transforming a host of industries.”
Baidu, Inc. was held by 47 hedge funds as of Q1 2022.
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