- 2 Coronavirus-Proof Chinese Stocks to Buy Now
- 1. TAL Education Group
- 2. JD.com
- 5 Chinese Stocks to Buy When Coronavirus Fears Fade
- Cheap Chinese Stocks to Buy When Coronavirus Fears Fade: Alibaba (BABA)
- Vipshop (VIPS)
- JD.Com (JD)
- Nio (NIO)
- Bilibili (BILI)
- Opinion: 5 reasons coronavirus fears are overblown — and 14 stocks to buy now
- 2. The lockdown affects a small part of China
- 3. The breakout happened at an opportune time
- 4. The public typically tends to overreact to health threats
- 5. Any economic impact will be short lived
- What stocks to buy
- 10 Best Chinese Stocks To Buy Now
- 10. Nio Inc. (NYSE: NIO)
- 9. Bilibili Inc. (NASDAQ: BILI)
- 8. Yum China Holdings (NASDAQ: YUMC)
- 7. New Oriental Education & Technology Group Inc. (NASDAQ: EDU)
- 6. TAL Education Group (NASDAQ: TAL)
2 Coronavirus-Proof Chinese Stocks to Buy Now
China may be experiencing a second outbreak of COVID-19 after over 180 people fell ill after coming in contact with a market in Beijing. Authorities have declared a level 2 emergency response level, canceled flights, and closed off several communities near the epicenter of the outbreak.
While it is too soon to predict the full impacts of this developing situation, investors can take proactive steps to protect their portfolios.
Here are two coronavirus-proof Chinese stocks that can thrive in this uncertain environment because of their rapid growth and coronavirus-resistant business models.
The first pick is TAL Education Group (NYSE:TAL), a bet on China's booming online education market. The second is JD.
com (NASDAQ:JD), a rapidly growing online retailer that will benefit from stay-at-home shopping and its robust logistics network.
Image Source: Getty Images.
1. TAL Education Group
TAL Education is a China-based education service provider that offers tutoring in core subjects English, Chinese, mathematics, and science. China's education market is expected to grow at a CAGR of 11.
3% until 2023 due to the country's increasing urbanization, household wealth, and internet penetration. And TAL is poised to benefit from this trend because of its established brand and large online footprint.
The stock has held up well during the coronavirus pandemic with shares soaring 40% year-to-date compared to a 4% decline in the S&P 500. TAL is coronavirus-resistant because its online education business can offset potential declines in its offline business due to coronavirus-related school closures.
In the fiscal fourth quarter of 2020, which ended in February, TAL reported revenue growth of 18% from $727 million to $858 million while revenue contribution from its online offering Xueersi.
com grew from 17% of the total to 24% of the total.
The company also migrated some of its small class students to online classes which demonstrates a level of flexibility in the business model that could help shield it from a potential second wave of COVID-19.
Geographical expansion is a key part of TAL's growth strategy that will also help protect the company from localized school shutdowns (such as the one going on right now in Beijing). During the fourth quarter, revenue from second and third-tier cities helped offset the coronavirus-related declines in first-tier cities Beijing, Shanghai, Guangzhou, Shenzhen, and Nanjing.
China is the largest e-commerce market in the world, and the opportunity continues to grow at a breakneck pace with a projected CAGR of 10% until 2023. As China's second-largest online retailer (behind Alibaba), JD.com is uniquely poised to exploit this massive opportunity because of its strong logistics network and coronavirus-resistant business model.
TAL Education, JD.com stock has performed well during the pandemic with shares soaring by 67% year to date. The business can benefit from stay-at-home demand as consumers turn to online shopping to help with social distancing and slow the spread of COVID-19.
JD reported first-quarter earnings on May 15, and the results demonstrate strong resilience in the face of coronavirus-related challenges in the economy. Total revenue grew by 21% to 146.2 billion RMB ($20.6 billion) and annual active customer accounts expanded by 25% to 387.4 million in the trailing twelve months ending on March 31, 2020.
JD has a competitive edge in logistics because of its large network of over 730 warehouses and front distribution centers in 29 cities. This could give it an advantage in same-day delivery, making the business more pandemic-resistant.
In the first quarter, JD Logistics launched a service called “Mobile Fresh Basket” to deliver fresh produce in over 100 Chinese cities amid coronavirus lockdowns, and it expanded its on-demand delivery service to supply medical products insulin and traditional herbal medicines.
China may be on the verge of another major coronavirus outbreak, but that's no reason to shun Chinese stocks altogether. TAL Education Group and JD.com offer rapid growth and compelling, coronavirus-resistant business models. That's why they are good stocks to consider during these uncertain economic times.
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5 Chinese Stocks to Buy When Coronavirus Fears Fade
[Editor’s note: “5 Chinese Stocks to Buy When Coronavirus Fears Fade” is regularly updated to include the most relevant information available.]
Coronavirus fears roiled global markets in late February and March. But, in April, a sign of hope has emerged from an unly place: China.
While the rest of the world is fighting the coronavirus pandemic with all of its resources, China has largely put the outbreak behind it. After roughly two months of quarantining, the number of new local cases in China is near-zero, and daily life is getting back to normal.
This is important for two reasons. One, it shows that Covid-19 is “beatable”, and that strict quarantining can beat the virus in a relatively short time. Two, it gives investors the “green light” to buy Chinese stocks as the world’s second largest economy normalizes and rebounds in the second quarter.
With that in mind, here’s a list of the best cheap Chinese stocks to buy as coronavirus fears fade and China’s economy rebounds in the second quarter:
- Alibaba (NYSE:BABA)
- Vipshop (NYSE:VIPS)
- JD.Com (NASDAQ:JD)
- NIO (NYSE:NIO)
- Bilibili (NASDAQ:BILI)
Cheap Chinese Stocks to Buy When Coronavirus Fears Fade: Alibaba (BABA)
Source: BigTunaOnline / Shutterstock.com
Percentage Off 52-Week Highs: -11.5%
Forward Price-Earnings Multiple: 23.7
The 12% drop in shares of Chinese tech giant Alibaba is nothing more than a great buying opportunity for a few reasons.
First, the company’s e-commerce business was only marginally and temporarily impacted by coronavirus. Consumers pulled back on consumer discretionary spend in January and February.
But, whatever dollars they did spend, were spent online through platforms Alibaba (because consumers didn’t want to go out). So, Alibaba ly weathered the storm while China was on lock-down.
Further, China ended its lock-down in March, and retail sales bounced back some. This rebound will persist in April and throughout the rest of the year.
Second, the company’s cloud business actually won in the first quarter, because the coronavirus accelerated demand for cloud computing services as companies and organizations rushed to pivot their workloads and processes into an online environment.
Third, Alibaba stock — at just 24-times forward earnings for what is an explosive growth narrative — remains one of the most attractively valued growth stocks on the market.
Net net, Alibaba stock is a long-term winner that showed impressive resilience during the coronavirus storm. Any weakness in shares today, will translate into strength tomorrow.
Source: madamF / Shutterstock.com
Percentage Off 52-Week Highs: -14.5%
Forward Price-Earnings Multiple: 13.3
One Chinese stock which has been relatively insulated from the coronavirus pandemic is online discount retailer Vipshop.
When you can’t go outside, you shop online. When you’re worried about the economy, you shop at discount retailers. So, while consumers spent way less on discretionary items in the first quarter, whenever they did spend money on discretionary items, they did so at Vipshop.
Total retail sales in China dropped by more than 20% in the first two months of 2020. Vipshop management said in early March, however, that its Q1 sales would be down less than 20%. This relative fundamental out-performance has led to relative stock price out-performance. As of this writing, VIPS stock is less than 5% from 52 week highs.
This strength in VIPS stock will continue. As the economy normalizes in the second and third quarters, consumer discretionary spending will rebound, and VipShop’s revenue growth rates will turn positive again.
As they do, recent strength in VIPS stock will persist, and shares will keep climbing.
Source: Sundry Photography / Shutterstock.com
Percentage Off 52-Week Highs: -5.3%
Forward Price-Earnings Multiple: 39.8
Much Alibaba stock, JD.Com stock has been hit on concerns that widespread coronavirus fear killed discretionary spend in the first quarter of 2020.
It did. No question about it. If I’m worried about getting sick and dying, I’m not going to buy a new t-shirt. It’s that simple.
But, what’s also surprisingly simple, is that once I’m done worried about getting sick and dying, I will buy a new t-shirt. Just look at March retail sales data from China. From February, retail sales rose by about 0.2%.
This recovery will continue. As it does, JD.Com’s growth trajectory will ramp back up. Revenues will run higher. Margins will expand. Profits will meaningfully scale.
All in all, the company will get back to firing on all cylinders again in the second quarter. As it does, the stock will roar to new highs.
Source: Sundry Photography / Shutterstock.com
Percentage Off 52-Week Highs: -42.8%
Forward Price-Earnings Multiple: N/A
One Chinese stock which has been hit hard by coronavirus concerns is Nio. And that makes a ton of sense.
After all, Nio sells premium electric vehicles. Chinese consumers didn’t buy many cars in the first quarter of 2020, let alone many premium electric ones.
But, before the outbreak, Chinese consumers were buying a bunch of cars, and they were especially buying a bunch of premium electric vehicles. Nio’s delivery trends were on a huge upswing in the back-half of 2019.
That big upswing will resume in the second quarter of 2020 for a few reasons. First, there’s tons of stimulus to support big-ticket purchases a premium electric car. Second, China phased out EV subsidy cuts this year. Third, Nio is launching a new vehicle, the EC6, later this year — and the last new vehicle launch, the ES6, was a huge success.
Meanwhile, Nio has secured sufficient financing from Hefei’s city government to absorb any and all cash burn during the first quarter without risking insolvency.
Big picture: the slowdown in Nio’s growth ramp is temporary, and the company has enough resources to weather this temporary downturn. Nio will resume its growth ramp in the second quarter. When it does, the stock will rebound in a big way.
Source: rafapress / Shutterstock.com
Percentage Off 52-Week Highs: -7.9%
Forward Price-Earnings Multiple: N/A
Shares of Chinese social video platform Bilibili — often dubbed the of China — have actually surged amid the coronavirus outbreak.
Year-to-date, BILI stock is up 60%.
Why the huge rally? Because amid the outbreak, Chinese consumers have been cooped up in their homes. While at home, those consumers have been bored their minds, turning to at-home entertainment options Bilibili to entertain themselves. Presumably, then, Bilibili usage and engagement has actually gone up over the past few weeks.
As goes engagement, so goes Bilibili’s platform, since it’s built on the back of subscription dollars and ad revenue.
It is quite ly that, as China’s economy rebounds in the coming months, Bilibili’s already good growth trends, will only get better. As they do, this red hot stock, will only get hotter.
Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego.
A Caltech graduate, Luke has consistently been recognized as one of the world’s top stock pickers by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns.
Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he was long BABA, JD, and NIO.
Opinion: 5 reasons coronavirus fears are overblown — and 14 stocks to buy now
Investor fears about the coronavirus are overblown.
So Monday’s biggest one-day percentage declines since early October in the Dow Jones Industrial Average DJIA, +0.75% and the S&P 500 index SPX, +0.84% on coronavirus fears have created nice buying opportunities in 14 stocks with lots of exposure to China.
Before we get to those, here are five reasons why investors are panicking too much about coronavirus.
The big unknown here is how deadly and contagious coronavirus is. No one really knows, but medical experts at Johns Hopkins are downplaying the threat from 2019-nCoV, the name for the type of coronavirus grabbing headlines.
“The immediate health risk from 2019-nCoV to the general public in the United States is thought to be low at this time,” says Gabor Kelen, a medical doctor and director of the Johns Hopkins Office of Critical Event Preparedness and Response.
Even if coronavirus turns out to be as contagious and deadly as really bad contagious diseases Ebola, it will most ly be successfully curbed. The Ebola outbreak a few years ago was effectively kept in check, and so were the Severe Acute Respiratory Syndrome (SARS) outbreak of 2003-04, and the Middle East Respiratory Syndrome (MERS) outbreak early last decade.
“All three outbreaks were contained before they could have a significant impact on the global economy or financial markets around the world,” says Ed Yardeni, of Yardeni Research. “We expect the same outcome with the current outbreak.”
The good news is that health officials learned a lot about containing virus outbreaks from those three experiences.
“Health technology has advanced considerably,” says Andrew Tilton, the chief Asia economist at Goldman Sachs. “Chinese authorities have already sequenced the virus and shared it with the global health community, and the U.S. Centers for Disease Control have just developed a test for the virus.”
Another positive is that public awareness seems to be much higher, because of the more rapid ofﬁcial response in China and the internet and social media, says Tilton. Local authorities in China reported SARS quickly in early January 2003. But up the chain of command, officials dragged their feet. The ﬁrst official press conference on SARS did not happen until Feb. 11.
Read:CDC officials say coronavirus is similar to SARS, no new U.S. cases reported
2. The lockdown affects a small part of China
But what about the lockdown? Even if coronavirus is contained, won’t the lockdown have a big impact on China’s economy? Probably not, at least as things stand now. The cities locked down are all near Wuhan, in Hubei province, where coronavirus originated. So far, the lockdown affects only around 60 million people a population of 1.4 billion.
wise, Hubei province only produces about 4.7% of China’s overall GDP, according to the National Bureau of Statistics of China.
Read:3 reasons coronavirus won’t derail China’s economy
3. The breakout happened at an opportune time
China’s economy was about to wind down anyway for the Chinese New Year celebration when the outbreak occured. So productivity was already scheduled to take a seasonal dip.
To the extent that the virus in China creates domestic fear and unrest, or hurts the economy, it weakens China’s Premier Xi Jinping’s hand in tariff negotiations with the U.S. This suggests and easier path toward progress, which would be a positive for business confidence and the U.S. stock market.
Of course, the bad news here is that a lot more people in China have travel plans around the New Year. This could make the virus spread more quickly.
4. The public typically tends to overreact to health threats
Whenever there’s a new virus outbreak, people are egged on by the media echo chamber, which latches on to the story and repeats it ad nauseum, drilling fear and concern into the minds of investors and the general public a. The same thing happens on social media, where rumors can spread unchecked.
This amplifies the perception of risk, but not the risk itself. At some point and perhaps soon, the media and will move on to the next story of the day, and coronavirus fears will ease.
The echo chamber impact was compounded by the following problem: Investor sentiment was extremely high going into this (both the Dow and the S&P set the latest in a string of records on Jan.
17), which made the market more vulnerable to “bad news” and negative headlines. Overconfident investors are convinced that nothing can go wrong.
So when something negative crops up, they’re surprised and they feel betrayed, which escalates their selling.
Part of the exaggerated reaction to coronavirus is linked to the fact that it is new, and emanating from a foreign country. The fears about it seem irrational, if you consider the following contrasts. So far, coronavirus has claimed fewer than 100 lives. SARS, which also sparked widespread panic and investor selling, claimed hundreds of lives, and fewer than 10,000 cases were reported.
In contrast, other flu viruses in circulation in the U.S. last year took over 34,000 lives, and they are taking a similar toll this year. Yet un coronavirus and SARS, these flu viruses have had zero impact on the stock market. This suggests the current hysteria developing about coronavirus is irrational.
Read:As fifth coronavirus case is confirmed in the U.S. — this is how the illness has spread across the world so rapidly
5. Any economic impact will be short lived
Coronavirus fears could hit travel globally, and produce a decline in consumer spending in Asia and the U.S. But the effect tends to wear off pretty fast. “These retrenchments in spending are short-lived as consumers eventually get frugal fatigue,” says Jay Bryson, acting chief economist at Wells Fargo Securities.
One fear is that there could be enough of a pullback in consumer spending and travel to hit economic growth. But again, the effect will probably be limited. “The negative impact on growth and asset prices from viral outbreaks typically normalizes within a few months,” says Tilton at Goldman Sachs.
“The outbreak of the coronavirus could drive large swings in Mainland China and emerging Asia growth in the first half but a much smaller impact on full-year growth, if the SARS episode is any guide,” says JP Morgan economist Bruce Kasman.
Several recent developments will continue support the economy and the stock market, says Baird chief investment strategist Bruce Bittles. He cites recent progress on U.S.-China trade talks, an accommodative Federal Reserve, low interest rates, and muted inflation. “We don’t expect these factors supporting investor confidence and consumer spending to change anytime soon,” he says.
Read:Economic hit from coronavirus ly to be short lived, but it’s still ‘a little scary, frankly’
What stocks to buy
All of this suggest stocks hit particularly hard because they have exposure to China look buys here.
Take Royal Caribbean Cruises RCL, +0.05%, for example.
“If history is any guide, the weakness in Royal’s stock could present a compelling buying opportunity as consumers have been fairly quick to shrug off illness outbreaks in recent years,” says William Blair analyst Sharon Zackfia. The cruise industry actually did better after the SARS outbreak and “more recent outbreaks such as Zika or Ebola have had no discernible impact on cruise demand,” she says.
Also consider U.S. companies getting hit hard in the past few days because of China exposure. They include: Starbucks SBUX, +0.86%, Walt Disney DIS, -0.93%, Nike NKE, +2.46%, Estée Lauder EL, +0.95%, Wynn Resorts WYNN, -1.
89%, Las Vegas Sands LVS, -0.97%, Marriott International MAR, -1.17%, Hyatt Hotels H, -0.56%, Yum China Holdings YUMC, -1.63%, IMAX IMAX, -3.83%, PVH PVH, +1.99%, Tapestry TPR, -1.00%, and GreenTree Hospitality Group GHG, +1.
Read:These U.S. stocks are down the most as the coronavirus spreads
Of course, if there’s a massive coronavirus outbreak in China, all bets are off, but that’s not my base case. To track the progress, see this map from Johns Hopkins.
Now read:Your 6-point plan to navigating a choppy stock market
At the time of publication, Michael Brush had no positions in any stocks mentioned in this column. During the past 10 years, Brush has suggested RCL, SBUX, WYNN, DIS, MAR and H in his stock newsletter Brush Up on Stocks.
10 Best Chinese Stocks To Buy Now
In this list we are going to get you up to speed with the best way to invest in Chinese stocks with the 10 best Chinese stocks to buy now.
Be it because of your admiration for the home of a certain sizeable wall or for strategic positioning, you could do worse than invest in these companies so if you're eager – go straight ahead to our straight-to-the point version – 5 best Chinese stocks to buy now.
2020 has been a rough year for the whole world but you might remember China being in the beginning of it all. After the markets of Wuhan were ravaged by COVID-19 which lead to an unprecedented lockdown, you might think the nation is rather the worse for wear in financial terms.
Well, you're certainly wrong – China is the only large economy in 2020 that is expected to achieve positive growth. The International Monetary Fund expects the country's economy to expand by 1.
2% by the year's end while other sources put that number closer to 2%. It might not seem much but once you apply the sheer scale of the economy to it, it's definitely a sizeable degree of growth.
So much so that China on its own is pulling the global numbers above the 0 mark. Without it, the IMF would have recorded a negative cumulative growth.
To add to that, this October's World Bank report underlines that the country is expected to head into a strong 2021 with a predicted growth of 7.9%. In other news, investors who are looking for good foreign returns should get ready to look back at China. You might take a look at short term trends and decide to invest in Chinese stocks.
However, you should also know that the long-term trends also point to much stronger Chinese economy. American capitalism beat Russian style socialism 30 years ago. On the contrary, Chinese style socialist capitalism seems to be performing much better than American capitalism or as Bernie Sanders calls it, corporate socialism.
China's economy is set to become the biggest economy in the world within the next 10 years. China is still technologically behind the United States, but it is catching up fast.
China might actually leapfrog the United States in terms of self driving cars in the next few years as Chinese government is doing whatever it can to catalyze the advancement of Chinese companies' self driving technology, including building smart roads.
Top 25 Richest, Healthiest, and Most Advanced Countries in the World
Did you know that In 2018 China's automotive market produced nearly 30 million light vehicles, nearly 70% bigger than the U.S. automotive market? China can produce almost anything cheaper, faster, and in larger quantities than the Western countries can.
Competition among Chinese companies is brutal. If you think China is a “socialist” country, you should talk to Chinese workers who work longer hours in risky environments. China is brutally capitalist.
The government, companies, and workers are all working towards the goal of technological competitiveness and high economic growth rates.
When you look at academic studies about stock market returns, the conclusion of these academic studies is that investing in the stock market would have yielded nearly double digit returns over the years. However, that's only because these studies use American stock market data.
American companies delivered mind blowing returns because America, as a country, has been on the winning side of economic and political struggles. Now China is on its way to becoming the biggest economy in the world. By 2050, Chinese economy will be 60% bigger than the U.S. economy. Even Indian economy will be bigger than the U.S. economy.
As an investor, if you don't want to be left behind, you need to identify the long-term winners in the future's biggest economies and gain some exposure.
In this article we will try to identify the 10 best Chinese stocks to buy now.
We took a look at the US – China Economic and Security Review Commission (USCC)'s data to identify the top Chinese stocks that trade in the US stock exchanges. Then we crossed that information with Insider Monkey's hedge fund sentiment data to produce a list of the top 10 Chinese stocks among hedge funds.
Our research has shown that hedge fund sentiment data is a very useful way of identifying stocks with huge upside potential. We have been recommending a portfolio of 12-20 stocks (using hedge fund sentiment data in our selection process) in our premium monthly newsletter since March 2017.
Our diversified portfolio of stock picks returned 145% since March 2017, vs. 67% gain for the S&P 500 ETFs. You can download a free sample issue here.
Since hedge fund sentiment data was helpful in identifying market beating stocks, we decided to use this data to identify the best Chinese stocks to buy now.
10. Nio Inc. (NYSE: NIO)
Number of hedge funds: 35
Total value of hedge fund holdings: $1.4 billion
Nio Inc. is a rising manufacturer of electric vehicles – a type of transportation that we are sure to see more of in the coming years. Aside from that it's also involved in organising the first of its kind championship for electric vehicles – FIA's Formula E.
Recently Nio has seen an increase in popularity with investors that helped it get on a total of 35 hedge fund portfolios. To add to that, and the aggregate value of the hedge fund holdings surged to $1.40 billion from $567.82 million at the end of June. This landed the company a position in the middle on our list of the 10 best auto stocks to buy now.
McLain Capital made some cautious statements about NIO in its Q2 investor letter (obviously given NIO's meteoric rise since this summer, they were wrong about shorting NIO). Here is what they said:
“Nio, Inc. (NIO): It’s stock up 360% since the beginning of June on no news, and one of our more troublesome short positions, the Chinese electric vehicle manufacturer is valued at a whopping $17bln on trailing revenue of only $1.1bln.
In 2019, the business ran a -17% gross margin, a -140% EBITDA margin & burned ~$1.5bln in cash in 2019.
The stock has become one of the most popular stocks among retail traders with approximately 250,000 accounts holding the name just on the popular Robinhood trading platform.”
9. Bilibili Inc. (NASDAQ: BILI)
Number of hedge funds: 37
Total value of hedge fund holdings: $1.02 billion
Bilibili ranks 9th in our list of the 10 best Chinese stocks to buy now. Bilibili, aside from a catchy name is also a huge part of modern Chinese culture, being one of the most popular video streaming platforms.
The company has expanded into the gaming world by landing a deal for China's streaming rights for the League of Legends World Championships, aside from owning and competing with its own team.
This landed it a spot in our list of the top 10 best gaming stocks to buy now.
Financially, the company has been excelling steadily – hedge fund ownership has risen for four consecutive quarters, increasing by 106% during this year. Yiheng Capital, managed by Jonathan Guo is the biggest holder of Bilibili stock with a total value of $277 million. We covered Tao Value's detailed Bilibili bullish thesis in this article. Here is a short exceprt from that article:
BILI’s story could one day be a great case study of “how to build a profitable without ads”. It has made great strides to this goal thus far. Mobile game is a proven lucrative business and is strengthened by Sony’s new strategic investment.
Both live streaming & e-commerce are also promising as the monetization models are well built & tested in China, for example, tipping streamer (for which platform can take a quick cut) widely becomes a convention, and mobile payment & logistics infrastructure are mature for e-commerce.
Therefore, BILI can focus on fostering high quality PUGC which attracts traffic for further downstream monetization. To achieve this, BILI had built a welldesigned incentive system for creators yet without diluting the “culture” from its origin.
Valuation: BILI looks reasonably value optically at 4.5x sales. However, I think the simple revenue multiple overlooked the mixture of a lucrative game business & rest under-monetized best-of-breed PUGC video business. I estimated BILI’s game business could worth about $3b on a 15x forward earning, which, at our cost basis, implies $2.
8b for the rest operating businesses, or $22 market cap for each MAU. This is very cheap considering such a business should be able to easily monetize at $10/user (using either opportunity-cost-based survey or Chinese video/streaming/social media peers) from current mere $3.7/user when they see appropriate.
A reference point is that currently monetizes at $8/user globally, which is also under-done in my opinion. So, we paid 2.2X “fair” revenue for a of China, where I think a fair multiple should be between 5 to 10 times (depending how much growth you believe is still left).
It doesn’t mean BILI price won’t go down than what we paid, but I estimate it could worth twice to 5 times more in 3-5 years with decent probability.”
8. Yum China Holdings (NASDAQ: YUMC)
Number of hedge funds: 39
Total value of hedge fund holdings: $1.96 billion
YUMC ranks 8th among the 10 best Chinese stocks to buy now. Yum is a fast food company in China that, in 2016, was spun off Yum! Brands – the company that manages brands such as KFC, Taco Bell and Pizza Hut.
Our data shows that in 2020's second quarter, YUMC was found on 35 hedge fund portfolios.
The current number is 39, which means that Yum is at its all time high bullish number of hedge fund positions.
According to Insider Monkey’s hedge fund database, Guardian Capital’s GuardCap Asset Management has the number one position in Yum China Holdings, Inc. (NYSE:YUMC), worth close to $178.2 million, comprising 6.8% of its total 13F portfolio.
Yum China is still profitable in 2020 despite the coronavirus pandemic related store closures. YUMC shares also returned nearly 20% this year.
7. New Oriental Education & Technology Group Inc. (NASDAQ: EDU)
Number of hedge funds: 40
Total value of hedge fund holdings: $1.70 billion
More commonly known as just “New Oriental”, this company is a provider of educational services, including pre-school education, general courses for students of various age levels, online education, overseas study consulting, and textbook publishing.
The Chinese education company had total revenues of $2.45 billion in FY2018 and managed to increase this to $3.6 billion in FY2020. Its success and expansion in recent month make it a strong investment opportunity according to Ray Dalio's list of 10 best growth stocks to buy now.
6. TAL Education Group (NASDAQ: TAL)
Number of hedge funds: 41
Total value of hedge fund holdings: $2.13 billion
TAL ranks 6th among the 10 best Chinese stocks to buy now. TAL Education Group offers some of the go-to comprehensive after-school tutoring services in various subjects. Tiger Global Management has the top position in hedge funds for TAL with $438 million in holdings.
It is also found on Ray Dalio's list of top growth stocks, underlining that this is another company in the education sector that investors have been enthusiastic about in Q3.
Bridgewater raised its stake in the company by 53%, valued at $52 million at the end of September.
Click to continue reading and see the 5 best Chinese stocks to buy now.
Disclosure: No positions. 10 Best Chinese Stocks To Buy is originally published at Insider Monkey.
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