China & Hong Kong Stock Picks (February 2025)

BOC Hong Kong, Xiaomi, Trip.com, EHang Holdings, AIA Group, RoboSense Technology, Luckin Coffee, ANTA Sports Products, YUM China, NAURA Technology Group, Will Semiconductor, etc.

Tencent (HKG: 0700 / LON: 0LEA / FRA: NNND / SGX: HTCD / OTCMKTS: TCEHY) just reported earnings - leading to someone to Tweet this:

• Price/Book (Most Recent Quarter): 4.70

• Forward P/E: 19.42 / Forward Annual Dividend Yield: 0.83% (Yahoo! Finance)

However, the Nikkei Asia (Long-term foreign equity investors reassess their China bearishness 🗃️) quoted an investor who gave a reason to be more cautious about Chinese stocks:

In U.S. markets, a private equity firm or an activist investor can step in to push for change if a stock gets pummeled. But, in China, "You're much more dependent on the government's views of a company or a sector, which can be positive and can be negative at different times," said David Williams of Williams Capital Advisors, LLC, a Palo Alto-based investment banking firm focused on Silicon Valley and Asia.

And alt-finance site Zero Hedge is even more cynical:

💻 China Maps Out Latest Plan To Boost Consumption, Raise Incomes: Here's Why All Such Prior Plans Have Been Failures 🗃️

It feels like every 3 months China comes up with another zany plan to boost the economy and kickstart consumption, which spikes stocks for a few days, but promptly goes nowhere, is quickly forgotten... only to be replaced with another zany plan 3 months later, and so on.

Today was no exception to this laughable cadence - which has achieved absolutely nothing but unleash core deflation in China for the first time since 2021 - and in a Sunday statement by Beijing State Council we learned that China will take steps to revive consumption by boosting people’s incomes, the official Xinhua News Agency reported.

Other just as vague measures include "stabilizing the stock and real estate markets, and offering incentives to raise the country’s birth rate, as the government tries to ease the deflationary pressures afflicting the economy."

Of course, we have heard all of these over and over and over, and nothing at all has changed in the past 4 years. So we kinda doubt that anyone will care this time, but we are confident that HFT and various algos who have the memory of a goldfish will push Chinese stocks higher for at least a few days before the sellers inevitably take the upper hand again.

They go on to detail some of the plans, which include:

• Enlarge variety of bond-related products suitable for individual investors

• Adopt multiple measures to promote increase in farm incomes

• Raise financial help for some students

• Appropriately increase the basic pension for retirees

• Ensure timely and full distribution of unemployment benefits

• Support tourist attractions in expanding services and the reasonable extension of business hours

• Support opening of duty-free shops in cities where conditions permit

• Boost support for trade-in programs

• Lower the interest rate on housing provident fund loans at an appropriate time

• Scale back restrictions on consumption in an orderly manner

• Accelerate the development of new technologies and products such as smart wearables and autonomous driving

And mentioned this Twitter thread from Michael Pettis:

I would not completely rule out Chinese stocks, but one needs to be very selective. In addition to our Monday posts, our China, Hong Kong & Macau Stock Index has a few hundred Chinese/HK/Macau stocks to consider:

• 🇨🇳 China (284)

• 🇭🇰 Hong Kong (52)

• 🇲🇴 Macau (8)

Stocks covered by a couple of equity research providers in this post:

[Note: On desktop browsers, an autogenerated table of contents will appear on the left side linked to each stock. I will add those links below after publishing/emailing this post…]

JNBY Design, BOC Hong Kong, Xiaomi, Jiangxi Rimag Group, CSPC Pharmaceutical, Trip.com, EHang Holdings, Weichai Power, AIA Group Ltd, Shanghai United Imaging Healthcare, Cloud Music, Luckin Coffee, Will Semiconductor Co Ltd, Alibaba, Bilibili, Yancoal Australia, China Tower Corp Ltd, RoboSense Technology, iQIYI, Baidu, BYD Electronic International, China MeiDong Auto Holdings, Aac Technologies Holdings, Sunny Optical, Jiangsu Lopal Tech Co Ltd, Yum China, Shenzhen Dobot Corp Ltd, JS Global Lifestyle & EVA Precision Industrial Holdings

CMB International Capital Corporation, a wholly owned subsidiary of China Merchants Bank (SHA: 600036 / HKG: 3968 / OTCMKTS: CIHKY / OTCMKTS: CIHHF), has a monthly list of 20+ high conviction stock ideas - namely Chinese stock picks (see our 2023 - May, June, July, August, September, October, November & December; 2024 - January-February, March, April, May, June, July-August, September, October, November & December; 2025 - January posts summarizing those) BUT these lists do not change too much from month to month. Stocks covered by the CMBI February 2025 list (including additions and deletions) and included in this post with updated stats and charts include:

Geely Automobile Holdings, Xpeng Inc, Zoomlion Heavy Industry, China Hongqiao Group, Luckin Coffee, ANTA Sports Products, Yum China, Proya Cosmetics, China Resources Beverage Holdings (CR Beverage), WuXi AppTec Co, China Pacific Insurance (Group) Co, PICC Property and Casualty Co Ltd, Tencent, NetEase, Alibaba, Greentown Service Group Co, Xiaomi, Foxconn Interconnect Technology (FIT Hon Teng), BYD Electronic International, Zhongji Innolight Co Ltd, NAURA Technology Group, Will Semiconductor Co Ltd, & Kingdee International Software Group

And as always, this post is provided for informational purposes only (and to make your life easier…). It does not constitute investment advice and/or a recommendation…

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🔬 Research analysis (including articles/blog posts from fund managers, etc.); 🎥 Video; 🎙️ Podcast; 🎬 Webinar; 📰 Newspaper/magazine article; 📯 Press release; 💻 Substack/blog/website article; ✅ Our own posts; 🗃️ Archived article; ⏰ Upcoming webinar or event; ⚠️ Disclosures or restricted access e.g. based on your location, investor status, etc.; 🇼 Wikipedia page; 🏷️ Tagged links to other posts about the stock.

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JNBY Design

🔬 JNBY Design (3306 HK) - Sales trend is muted but yield is still attractive (CMB International) 02-28 2025 ⚠️

• 🌐 JNBY Design (HKG: 3306) 🇰🇾 - Designs & sells fashion apparel, footwear, accessories & home products under a portfolio of brands. 🏷️

• Price/Book (Current): 3.08

• Forward P/E: 7.46 / Forward Annual Dividend Yield: 8.54% (Yahoo! Finance)

BOC Hong Kong

🔬 BOC Hong Kong (02388 HK): Leading Chinese Bank, Regional Ambitions Accelerate (Guotai Junan International) 02-28 2025 ⚠️ $

• 🌏🏛️ BOC Hong Kong Holdings Ltd (HKG: 2388 / FRA: BOF / BOFA / OTCMKTS: BHKLY / BNKHF) - Commercial banking group. Subs. of Bank of China (SHA: 601988 / HKG: 3988 / SGX: HBND / OTCMKTS: BACHY / BACHF). 🇼 🏷️

• Price/Book (Current): 0.99

• Forward P/E: 7.50 / Forward Annual Dividend Yield: 5.62% (Yahoo! Finance)

Xiaomi

🔬 Xiaomi (1810 HK) - Key takeaways from Xiaomi 15 Ultra & SU7 Ultra Launch Event (CMB International) 02-28 2025 ⚠️

🔬 Xiaomi (1810 HK) - 4Q24 Preview: Expect another strong beat; Raise TP to HK$54.53 (CMB International) 02-20 2025 ⚠️

• 🌐 Xiaomi (HKG: 1810 / SGX: HXXD / FRA: 3CP / OTCMKTS: XIACF) 🇰🇾 - Consumer electronics & smart manufacturing company. Smartphones & smart hardware connected by an IoT platform at its core. 🇼 🏷️

• Price/Book (Current): 7.21

• Forward P/E: 52.36 / Forward Annual Dividend Yield: N/A (Yahoo! Finance)