CMBI Research China & Hong Kong Stock Picks (May 2024)
JOYY Inc, Baozun, NAURA Technology Group, Weibo, Xiaomi Corp, XPeng, Trip.com, Li Auto, Baidu, JD.com, ZTO Express, China Pacific Insurance, United Energy Group, Yum China, China Life Insurance, etc.
CMB International Capital Corporation is a wholly owned subsidiary of China Merchants Bank (HKG: 3968 / SHA: 600036 / 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 May and in this post include:
JOYY Inc, Baozun, NAURA Technology Group, CSPC Pharmaceutical, Atour Lifestyle Holdings, Weibo Corp, Topsports, Ke Holdings, Bilibili, NetEase, Xiaomi Corp, Pinduoduo, Kuaishou Technology, Tongcheng Travel Holdings, XPeng, Trip.com, Li Auto, Mobvista, Sany Heavy Equipment International Holdings, iQIYI, Baidu, JD.com, ZTO Express, Tencent, Alibaba, Huya Inc, Tencent Music Entertainment Group, Xtep, GigaCloud Technology, FIT Hon Teng, BeiGene, PICC Property and Casualty Co Ltd, EVA Precision Industrial Holdings, China Pacific Insurance (Group), United Energy Group, Yum China, Shanghai Henlius Biotech, Joinn Laboratories China, WuXi AppTec, China Life Insurance, Amazon.com, BYD Electronic International Co Ltd & Zoomlion Heavy Industry
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, March & April posts summarizing those) BUT these lists do not change too much from month to month. Stocks covered by the CMBI May list (including Additions and Deletions) and included in this post with updated stats and charts include:
Li Auto, Zoomlion Heavy Industry, Weichai Power, Zhejiang Dingli Machinery, Xtep, Bosideng International Holdings, Haier Smart Home, Vesync, Kweichow Moutai, BeiGene, China Pacific Insurance (Group), PICC Property and Casualty Co Ltd, Tencent, Alibaba, Pinduoduo, Amazon.com, Netflix, Kuaishou Technology, GigaCloud Technology, CR Land, FIT Hon Teng, Xiaomi Corp, BYD Electronic International Co Ltd, Zhongji Innolight Co Ltd, NAURA Technology Group & Kingdee International Software
Over the past day, some mostly positive China news has hit the newswires:
📰 Hong Kong stocks leap as investors eye China market reforms, stimulus (SCMP) 🗃️
China’s top stock market regulator Wu Qing unveiled fresh measures to reform Shanghai’s Nasdaq-style tech board, while pledging improved listing quality
📰 China pledges reforms for Nasdaq-style Star Market, listing quality boost: CSRC (Nikkei Asia) 🗃️
Eight measures are introduced to reform the Star Market under the Shanghai Stock Exchange, said Wu Qing, CSRC chairman
📰 Risky China stocks slide as market braces for 'survival of the fittest' (Nikkei Asia) 🗃️
Regulators gather in Shanghai amid balancing act on raising standards
ST, or "special treatment," stocks have come under the spotlight in recent weeks, after the government said it would strengthen oversight of listed companies. Exchanges in Shanghai and Shenzhen add the ST label to companies' stock codes to warn investors of certain financial risks, such as consecutive years of net losses, or violations of exchange rules. Those at risk of delisting will have an additional asterisk in front of them.
📰 China tech stocks are back in favour with sceptic who had questioned their investibility (SCMP) 🗃️
‘Macro indicators which are showing early indication of a stabilisation’ have driven a rally, according to a JPMorgan analyst known for his bearish stance
Getting back to CMBI research: 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 (May 2023)
JOYY Inc
JOYY Inc (NASDAQ: YY) is a leading global technology company with a mission to enrich lives through technology. JOYY currently operates several social products, including Bigo Live for live streaming, Likee for short-form videos, Hago for multiplayer social networking, an instant messaging product, and others. The Company has created a highly engaging and vibrant user community for users across the globe. JOYY’s ADSs have been listed on the Nasdaq since November 2012.
On November 18, 2020, Muddy Waters Research released a report (MW is Short Joyy Inc. (YY US)) claiming fraud in the financial and public reporting of JOYY Inc (JOYY Refutes Muddy Waters' Report | JOYY Inc).
Price/Book (Most Recent Quarter): 0.33
Forward P/E: 8.73 / Forward Annual Dividend Yield: 6.02% (Yahoo! Finance)
Baozun
Baozun (NASDAQ: BZUN) is the leader and a pioneer in the brand e-commerce service industry and a digital commerce enabler in China. It serves more than 400 brands from various industries and sectors around the world, including East Asia, Southeast Asia, Europe and North America.
Baozun Inc owns three major business lines, which includes BAOZUN E-COMMERCE (BEC), BAOZUN BRAND MANAGEMENT (BBM) and BAOZUN INTERNATIONAL (BZI).
Baozun (BZUN US) - A solid start with steady transition year
Price/Book (Most Recent Quarter): 0.24
Forward P/E: 158.73 / Forward Annual Dividend Yield: N/A (Yahoo! Finance)
NAURA Technology Group
NAURA Technology Group (SHE: 002371) is a Chinese manufacturer of integrated circuit and semiconductor equipment (primarily etching equipment). The Company was formed through a strategic restructuring between Beijing Sevenstar Electronics and Beijing North Microelectronics. It mainly manufactures semiconductor equipment, vacuum equipment, new energy lithium battery equipment and precision components businesses, which provide solutions for semiconductors, new energy resources, new materials as well as other related fields.
See: NAURA Technology Group (SHE: 002371): A Potential US-China Chip Conflict Beneficiary
Naura Technology (002371 CH) - Key beneficiary of semiconductor localization
Price/Book (Most Recent Quarter): 6.82
Forward P/E: 31.75 / Forward Annual Dividend Yield: 0.14% (Yahoo! Finance)
