CMBI Research China & Hong Kong Stock Picks (March 2024)
DPC Dash, WuXi Biologics, BYD Company, AK Medical, Ping An, Weichai Power, Geely Automobile Holdings, Pinduoduo, Tencent, ZTO Express, China Lilang, Xtep, GigaCloud Technology, etc.
CMB International Capital Corporation is a wholly owned subsidiary of China Merchants Bank (SHA: 600036 / HKG: 3968 / OTCMKTS: CIHKY / OTCMKTS: CIHHF) - one of the largest banking groups and the largest privately-owned bank in China. They come out with (and post on their website) a steady stream of free research pieces - namely China and Hong Kong stock picks (see our front page for a full list of TAGS for our EM Stock Pick Tear Sheets).
Stocks covered during the month of March and in this post include:
Sany Heavy Equipment International Holdings, BYD Electronic International Co Ltd, ZhongAn Online P & C Insurance Co, New Hope Service Holdings Ltd, DPC Dash, WuXi Biologics, BYD Company, AK Medical, Ping An, Weichai Power, Sichuan Kelun-Biotech Biopharmaceutical, Zhihu Inc, SenseTime, China Yongda Automobile Services Holding, BOE Varitronix, Glodon, Jiumaojiu International Holdings, FIT Hon Teng, Shanghai Henlius Biotech, Aac Technologies Holdings, Baozun, Greentown Management Holdings Company, Zhejiang Dingli Machinery, J&T Global Express Ltd, Geely Automobile Holdings, Pinduoduo, Tencent, ZTO Express, China Lilang Ltd, Akeso, WuXi AppTec, Kingdee International Software Group, Xiaomi Corp, Tencent Music Entertainment Group, XPeng, Tongcheng Travel Holdings, JOYY Inc, Shanghai INT Medical Instruments, Xtep, GigaCloud Technology, Shennan Circuits, AIA Group, Tuhu Car, Mobvista, Weibo Corp, Ke Holdings, 361 Degrees International Limited, Horizon Construction Development, Intron Technology, ZTE, Bilibili, Prada SpA, JD.com, Yuexiu Transport Infrastructure, NIO Inc, Cloud Music, Hutchmed, Budweiser APAC & NetEase
They also come out with (and post on their website) a monthly list of 20+ high conviction stock ideas - namely Chinese stock picks (see our May, June, July, August, September, October, November, December & January-February posts summarizing those) BUT these lists do not change too much from month to month. Stocks covered by the CMBI March list (including Additions and Deletions) and included in this post with updated stats and charts include:
Li Auto, Geely Automobile Holdings, Weichai Power, Zhejiang Dingli Machinery, CR Power, CR Gas, DPC Dash, JNBY Design, JS Global Lifestyle, Vesync, Kweichow Moutai, BeiGene, PICC Property and Casualty Co Ltd, Tencent, Alibaba, Pinduoduo, Amazon, Netflix, Kuaishou, GigaCloud Technology, CR Land, FIT Hon Teng, BYD Electronic International Co Ltd, Luxshare Precision Industry, Zhongji Innolight Co Ltd & Kingdee International Software Group
As discussed in our recent post covering Korean stocks and an investor profiled in the book The Warren Buffetts Next Door: The World’s Greatest Investors You’ve Never Heard Of, I am including price/book (most recent quarter) ratios from the Yahoo! Finance statistics page in posts.
Some of the Chinese stocks in this post do have price/book ratios below 1.00 - indicating (on the surface…) they are or could be undervalued. Others have ratios not that far above one - including Chinese tech and EV stocks (in sharp contrast to Tesla’s 8.73, etc.).
As previously discussed though:
Strategy Tip
Rees cautions investors not to confuse his tangible asset value with the book value figures that are commonly quoted on dozens of web sites, including Yahoo Finance. Book value can be inflated by intangibles like goodwill or obsolete inventory. “Book value is too dodgy, squishy,” says Rees.
Nevertheless, they are a quick and dirty statistic to help decide whether a stock is worth further investigating and doing the more complex tangible asset value calculation the investor profiled in the book performs.
Note that when I click on CMBI’s website, I receive NO pop-up asking what sort of investor I am or my location; but there is this disclaimer at the end of each research report that readers need to be aware of:
This post will NOT be quoting directly from the research documents themselves (beyond giving the title to the linked research report - please keep the above disclosures in mind).
To make your life easier, this post includes:
A heading with the stock name.
A quick description of the stock pick with links to the IR page and stock quote(s) on Yahoo! Finance.
A link to any Wikipedia page (for what it might be worth…)
The title of the report linked to the file page on the CMBI website about the stock pick.
A price/book (most recent quarter) ratio plus forward or trailing P/E and dividend yields linked back to the Yahoo! Finance statistics page.
The latest long term technical chart linked back to Yahoo! Finance.
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…
CMBI Research (March 2023)
Sany Heavy Equipment International Holdings
Sany Heavy Equipment International Holdings Company Limited (HKG: 0631 / FRA: YXS / OTCMKTS: SNYYF) is an investment holding company involved in the manufacture and sale of mining equipment, logistics equipment, robotic, smart mine products, and spare parts. It operates in two segments, Mining Equipment and Logistics Equipment. The company offers coal mining machinery products, such as road headers, including soft rock and hard rock road headers, integrated excavation, bolting, and self-protection machinery; mining equipment consisting of coal mining machines, hydraulic support system, scraper and armored-face conveyors, etc.; non-coal mining machinery products comprising tunnel road headers and mining machines; and mining transport equipment, which include mechanical and electric drive off-highway dump trucks, widebody vehicles, and other related products. It also provides smart mine products, such as unmanned driving, automated integrated mining, and smart mine operation systems; container equipment comprising front loaders, stacking machines, quayside gantry cranes, etc.; bulk material equipment consisting of grippers, elevated hoisting arms, etc.; general equipment, including heavy-weight forklifts, telehandlers, etc.; and robotic system integration, mobile robots, and electric forklifts. In addition, the company provides maintenance and other, and property development services. It operates in Mainland China, rest of Asia, the European Union, the United States, and internationally.
SANY International (631 HK) - Solar power business remains major investor concern during site visit
Price/Book (Most Recent Quarter): 1.34
Forward P/E: 7.26 / Forward Annual Dividend Yield: 3.61% (Yahoo! Finance)
BYD Electronic International Co Ltd
BYD Electronic International Co Ltd (HKG: 0285) is the world's leading provider of intelligent product solutions, providing customers with new materials R&D, product R&D, intelligent manufacturing, supply chain management, logistics and after-sales services. In the context of 5G technology's upcoming commercialization, BYD Electronics closely follows market demand and industry hot spots, accelerates business transformation and upgrading, and develops 4 business areas including Smart Phone & NB PC, New Intelligent Product, Automotive Intelligent System,and Medical Devices. international large-scale automation production lines covering molding, metals, plastics, 3D glass, ceramic manufacturing and electronic intelligent manufacturing.
BYDE (285 HK) - Reiterate BUY on multiple growth drivers in 2024
Price/Book (Most Recent Quarter): 1.98
Forward P/E: 10.49 / Forward Annual Dividend Yield: 0.63% (Yahoo! Finance)
ZhongAn Online P & C Insurance Co
ZhongAn (HKG: 6060 / FRA: 1ZO) is the first online-only insurance company in China. Headquartered in Shanghai and supported by dual-engine of “Insurance + Technology”, ZhongAn Online P&C Insurance Co., Ltd. features a branch-less model , and uses leading technologies to reform the insurance value chain. They operate their businesses mainly in ecosystems of health, digital lifestyle, consumer finance and auto, providing personalized, customized and intelligent insurance products and risk management solutions.
As of end of 2021, they served over 5 million customers, issued about 42.7 billion insurance policies in total.
While using technology to innovate their own insurance business, they also export mature technology solutions and proven business model to domestic and overseas insurance industry. In November 2016, they founded a subsidiary, ZhongAn Information and Technology Services Co., Ltd. (ZhongAn Technology), which aims to help global partners pursue digital transformation. So far, ZhongAn has worked with over 600 clients around the world on digital transformation. Their prominent overseas clients include Japanese P&C insurer Sompo Japan Nipponkoa Insurance Inc., leading Southeast Asian O2O platform Grab and Singaporean composite insurer NTUC Income.
Price/Book (Most Recent Quarter): 0.90
Forward P/E: 24.21 / Forward Annual Dividend Yield: N/A (Yahoo! Finance)
