In this article, we discuss 10 beaten-down Asian stocks to buy today.
While the US dollar remains strong, Asian markets on June 10 stumbled on the back of higher rates guidance from the European Central Bank and the expected U.S. inflation levels. Japan’s Nikkei was down by 1.2%, and the Hong Kong-based tech stocks also took a beating, with their benchmark falling 2.9% upon opening on June 10. Alibaba Group Holding Limited (NYSE:BABA)’s US-listed shares dropped 8.1% overnight, and their Hong Kong-based counterparts tumbled 3.3% after the company’s affiliate, Ant Group, disclosed that it had no intention for an initial public offering.
The Chinese market remains volatile, owing to the ongoing COVID-19 restrictions and lockdowns amid new variants. On top of that, surging inflation and rising interest rates have dampened the effects of China loosening its regulations against the domestic tech giants. China has decided to lift the ban on the ride-hailing company DiDi Global Inc. (NYSE:DIDI) and allow its app to operate in the country, in an effort to stabilize the economy after the pandemic lows. Similarly, Tokyo is progressing, supported by the yen falling to a two-year low given market assumptions that the Bank of Japan will not tighten monetary policy amid higher US rates.
In this mixed Asian market, investors still seek opportunities to buy some quality yet beaten down stocks on the dip for long-term gains. Some of the most notable Asian stocks that have been battered yet offer growth prospects include Sea Limited (NYSE:SE), XPeng Inc. (NYSE:XPEV), and Coupang, Inc. (NYSE:CPNG).
Our Methodology
We selected Asian stocks that have posted notable YTD share price declines as of June 9, yet enjoy strong market positioning and offer growth prospects. We have mentioned the analyst ratings and hedge fund sentiment around the stocks as of Q1 2022, to provide better context to potential investors.
Beaten-Down Asian Stocks to Buy Today
10. Coupang, Inc. (NYSE:CPNG)
Number of Hedge Fund Holders: 39
YTD Share Price Decline as of June 9: 57.10%
Headquartered in Seoul, South Korea, Coupang, Inc. operates an e-commerce business, selling home goods and decor products, apparel, beauty products, everyday consumables, sporting goods, and electronics, in addition to restaurant order and delivery services. Coupang, Inc. shares have dropped over 57% year-to-date as of June 9. The company operates through Product Commerce and Growth Initiatives segments. While Product Commerce has been profitable in Q1 and Growth Initiatives continues to quickly grow in scale, it has not turned a profit yet.
On May 12, Citi analyst John Yu upgraded Coupang, Inc. to Buy from Neutral but lowered the price target to $15 from $29. The analyst sees greater visibility in Coupang, Inc.’s short-term profitability after the Q1 results. Margin was a positive surprise as the Product Commerce segment reported a turnaround in adjusted EBITDA much sooner than the company’s guidance of Q4, the analyst told investors in a bullish thesis.
According to Insider Monkey’s Q1 data, 39 hedge funds reported long positions in Coupang, Inc., up from 29 funds in the prior quarter. Lee Ainslie’s Maverick Capital held the leading position in the company, comprising 86.3 million shares worth $1.5 billion.
9. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 26
YTD Share Price Decline as of June 9: 43.77%
NIO Inc. (NYSE:NIO) manufactures and sells smart electric vehicles in China. The company also designs e-powertrains, battery packs, and related components. NIO Inc.’s power solutions include Power Home, Power Swap, Power Charger, Power Mobile, and Power Map. The company was incorporated in 2014 and is headquartered in Shanghai, China. Although the shares have been battered so far this year, electric vehicles and smart power solutions are positioned to explode in the future, given the ongoing theme of decarbonization and soaring energy prices.
Morgan Stanley analyst Tim Hsiao on June 10 reaffirmed an Overweight rating on NIO Inc. but lowered the price target on the stock to $31 from $34. The analyst believes that compressed Q2 margins occurred due to lower run rate and battery cost inflation but they will be temporary. The analyst remains bullish on the company’s robust pipeline and order backlog, which will likely boost 2H sales and output will recover to pre-pandemic levels.
According to Insider Monkey’s database, 26 hedge funds were long NIO Inc. at the end of Q1 2022, compared to 30 funds in the preceding quarter. D E Shaw is one of the leading stakeholders of the company, with 5.4 million shares worth about $115 million.
Like Sea Limited, XPeng Inc., and Coupang, Inc., NIO Inc. is one of the beaten-down Asian stocks that elite hedge funds are monitoring.
8. Sea Limited (NYSE:SE)
Number of Hedge Fund Holders: 77
YTD Share Price Decline as of June 9: 63.20%
Sea Limited is a Singapore-based company that operates digital entertainment, e-commerce, and digital financial services businesses in Southeast Asia, Latin America, and the rest of Asia. Sea Limited stock has declined 63.20% year-to-date as of June 9, and the pullback in shares has led the valuation to become more attractive at just more than 2x the 2023 revenue. The Q1 revenue jumped 64.41% YoY to $2.90 billion, topping market consensus by $41.18 million.
Barclays analyst Jiong Shao on May 19 reiterated an Overweight rating on Sea Limited but lowered the price target on the shares to $157 from $201. Against reopening challenges in Southeast Asia and difficult comps a year earlier, Sea Limited executed well and posted Q1 results that were largely in line with estimates, the analyst told investors in a research note.
Among the hedge funds tracked by Insider Monkey, Sea Limited was part of 77 public stock portfolios at the end of March 2022, compared to 108 in the preceding quarter. Chase Coleman’s Tiger Global Management is the biggest position holder in the company, with 13.5 million shares worth $1.6 billion.
Here is what Farrer Wealth Advisors has to say about Sea Limited in its Q1 2022 investor letter:
“Sea Limited had been selling off since its peak in early November of ~$363/share. This was driven by both a general sell off in tech, especially non-profitable tech, and a general belief that its gaming arm (Garena) was experiencing a slowdown due to its flagship game Free Fire. Free Fire has experienced a slowdown for three reasons: it is a victim of its own success, and by the end of Q321, nearly 10% of the world’s population already played the game, and thus reaching new users was difficult; A return to normal with people traveling/going out more and spending less time playing games; and the Indian market imposed a ban on the game due to anti-Chinese sentiment (Tencent is a large shareholder in Sea). We believed that these issues, while worth considering, were a bit overblown, and some of the data we saw from 3rd party sources showed that though Free Fire usage was dipping, it wasn’t too drastic. Thus, we marginally added to the position throughout the quarter. This was a mistake. During Sea’s earnings report in early March, the company guidance for Garena (down nearly 35% yoy) showed that the slowdown was far worse than predicted. Secondly, Shopee (Sea’s ecommerce arm) has pulled out of certain markets (in Europe and India), which long-term is probably the right strategy, but short-term hampers the optionality of the business. After considering this information and the guidance from earnings, we decided to significantly trim the position. In our opinion, management does have a bit of egg on its face from an overly aggressive expansion or as one investor called it, “bull market hubris.” We think management’s moves were mostly logical, it’s just that their failures came during an unforgiving market. While we believe that Sea’s future is still bright (especially with regards to their e-commerce and financial services), it will take a few quarters of strong earnings for them to regain their momentum, and for now the capital can be better spent elsewhere.”
7. Bilibili Inc. (NASDAQ:BILI)
Number of Hedge Fund Holders: 24
YTD Share Price Decline as of June 9: 42.96%
Bilibili Inc. (NASDAQ:BILI) was founded in 2009 and is headquartered in Shanghai, China. The company offers digital entertainment including video services, mobile games, and audio content. As of June 9, Bilibili Inc. stock has dropped about 43% year-to-date. The pullback in shares presents a favorable risk/reward ratio, as Bilibili Inc. remains the go-to video streaming platform in China for the young generation. The platform reported monthly active users of 272 million in Q4 2021.
Citi analyst Brian Gong on June 10 maintained a Buy recommendation on Bilibili Inc. but lowered the firm’s price target on the shares to $45 from $46 after the Q1 results.
Among the hedge funds tracked by Insider Monkey, 24 funds were bullish on Bilibili Inc. at the end of March 2022, compared to 33 funds in the last quarter. Jonathan Guo’s Yiheng Capital is the leading shareholder of the company, with 9.35 million shares worth $239.3 million.
Here is what Tao Value had to say about Bilibili Inc. in its Q3 2021 investor letter:
“As witnessed in the past quarter, the government intervention in the 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.”
6. Sony Group Corporation (NYSE:SONY)
Number of Hedge Fund Holders: 26
YTD Share Price Decline as of June 9: 18.97%
Sony Group Corporation (NYSE:SONY) is a Japanese multinational conglomerate that sells electronic equipment, instruments, and computer devices for the consumer, corporate, and industrial markets globally. The company remains at the front and center of secular growth trends. Although the stock has declined about 19% year-to-date as of June 9, the company has seen positive catalysts in 2022 given its vast offerings, and it remains well positioned as the tech world gears up for the metaverse.
Oppenheimer analyst Martin Yang on May 18 reaffirmed an Outperform rating on Sony Group Corporation but lowered the price target on the stock to $125 from $150. At its annual Corporate Strategy Meeting, Sony Group Corporation reiterated its aim to “fill the world with emotion through the power of technology and creativity”. As per the analyst, the company will continue to focus on content IP, direct-to-consumer services, and sensing technologies. He also told investors that Sony Group Corporation sees metaverse and mobility as new growth segments. Moreover, the company seeks to become more shareholder-friendly by emphasizing that share buy backs are part of its strategic investments, the analyst added.
According to Insider Monkey’s Q1 data, Sony Group Corporation was part of 26 hedge fund portfolios, compared to 28 in the earlier quarter. Alkeon Capital Management is the largest shareholder of the company, with 5.70 million shares worth $597.80 million.
In addition to Sea Limited, XPeng Inc., and Coupang, Inc., Sony Group Corporation is one of the notable battered Asian stocks to consider.
Here is what Aristotle Capital Management International Equity ADR has to say about Sony Group Corporation in its Q1 2022 investor letter:
“Sony, maker of the PlayStation video game console, was a leading detractor for the quarter. After a strong year in 2021, a shortfall in PlayStation 5 sales due to continued semiconductor shortages has dampened new console unit sales. Although there are likely to be continued limitations on the supply of components in the short term, consumer demand remains strong, and upcoming releases of major titles such as Horizon Forbidden West and Gran Turismo 7 are likely to further enhance demand. While Sony continues to manage supply-chain headwinds, the company has also again demonstrated its ability to build on the fundamental strength of its business across various segments. During the quarter, Sony acquired Bungie, a U.S.-based video game developer known for the Destiny franchise and live game services; completed its initial equity investment in Japan Advanced Semiconductor Manufacturing, a foundry service subsidiary of Taiwan Semiconductor Manufacturing Company (TSMC); and acquired Brazilian music label Som Livre. Lastly, Sony announced a partnership with Honda Motor (NYSE:HMC) where the two companies expect to combine Honda’s expertise in manufacturing vehicles with Sony’s proficiency in imaging, sensing, telecommunication and network technologies to develop and commercialize electric vehicles. We feel these strategic actions demonstrate Sony’s ability to continue to improve on its market positions across its business segments with a long-term, forward-looking approach.”
5. Kanzhun Limited (NASDAQ:BZ)
Number of Hedge Fund Holders: 20
YTD Share Price Decline as of June 9: 32.42%
Kanzhun Limited (NASDAQ:BZ) is a Chinese company offering an online recruitment platform that facilitates job seekers and employers in the hiring process. The stock has taken a beating year-to-date, falling 32.42% as of June 9. However, the company might see a turnaround soon as China eases restrictions on its tech sector and allows Kanzhun Limited’s application back on domestic app stores.
On April 10, Goldman Sachs analyst Timothy Zhao assumed coverage of Kanzhun Limited with a Neutral rating and a $37.50 price target.
Among the hedge funds tracked by Insider Monkey, 20 funds were bullish on Kanzhun Limited at the end of March 2022, up from 16 funds in the prior quarter. Tiger Global Management held the largest stake in the company, with 7.28 million shares worth $181.35 million.
4. Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG)
Number of Hedge Fund Holders: 14
YTD Share Price Decline as of June 9: 16.02%
Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG) was incorporated in 2002 and is headquartered in Tokyo, Japan. The company provides commercial banking, leasing, consumer finance, and other financial services, operating through four segments – Wholesale Business Unit, Retail Business Unit, Global Business Unit, and Global Markets Business Unit.
On April 27, Goldman Sachs analyst Makoto Kuroda initiated coverage of Sumitomo Mitsui Financial Group, Inc. with a Buy rating and a 4,900 yen price target, naming it his top pick among Japanese banks. He sees room for its multiples to recover due to strong fundamentals and shareholder returns. The removal of the present overhang presented by the brokerage subsidiary investigation is a “clear catalyst” for Sumitomo Mitsui Financial Group, Inc., the analyst told investors.
According to Insider Monkey’s data, 14 hedge funds were long Sumitomo Mitsui Financial Group, Inc. at the conclusion of Q1 2022, up from 10 funds in the last quarter. Jim Simons’ Renaissance Technologies is one of the largest shareholders of the company, with 3.65 million shares worth about $23 million.
3. Camtek Ltd. (NASDAQ:CAMT)
Number of Hedge Fund Holders: 16
YTD Share Price Decline as of June 9: 42.72%
Camtek Ltd. (NASDAQ:CAMT) is an Israel-based company that manufactures inspection and metrology equipment for the semiconductor industry. On May 12, Camtek Ltd. reported its first quarter results, posting an EPS of $0.44 and a revenue of $77.17 million, above consensus by $0.01 and $664,780, respectively.
Riley analyst Craig Ellis on May 13 reiterated a Buy rating on Camtek Ltd. but lowered the price target on the stock to $34 from $45 after the Q1 results. The analyst believes that the company is performing well, supported by solid advanced packaging secular tailwinds.
According to Insider Monkey’s database, 16 hedge funds were bullish on Camtek Ltd. at the end of Q1 2022, compared to 15 funds in the preceding quarter. Israel Englander’s Millennium Management is one of the leading stakeholders of the company, with 499,181 shares worth $15.20 million.
2. Agora, Inc. (NASDAQ:API)
Number of Hedge Fund Holders: 17
YTD Share Price Decline as of June 9: 56.11%
Agora, Inc. (NASDAQ:API) is a Chinese company that provides real-time engagement platform-as-a-service (RTE-PaaS) in China, the United States, and internationally. The company offers software tools to embed real-time video, voice, and messaging functionalities into applications. The stock has tumbled over 56% year-to-date as of June 9.
Nomura analyst Bing Duan on May 16 upgraded Agora, Inc. to Buy from Neutral with a price target of $10, down from $11. While the analyst moderately slashed FY22-24 revenue forecasts to account for a slower-than-expected recovery, he lifted earnings estimates on improved loss margins and believes “demand and policy shock” is already priced in the shares. The company is executing its $200 million repurchase program and the upgraded rating represents Agora, Inc.’s stabilizing operations, the analyst added.
According to Insider Monkey’s Q1 data, 17 hedge funds were long Agora, Inc., up from 12 funds in the prior quarter. Dawid Krige’s Cederberg Capital is the biggest position holder in the company, with 2.19 million shares worth $21.7 million.
Here is what Tao Value has to say about Agora, Inc. in its Q3 2021 investor letter:
“As witnessed in the past quarter, the government intervention in the 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 exited Agora (ticker: API) as we estimated that it has 25+% of evaporating revenue tied to online education use cases, but the management seemed to be evasive about the potential impact.”
1. XPeng Inc. (NYSE:XPEV)
Number of Hedge Fund Holders: 26
YTD Share Price Decline as of June 9: 48.26%
XPeng Inc. designs and manufactures smart electric vehicles in the People’s Republic of China. The company builds SUVs, four-door sports sedans, and family sedans. The stock has declined over 48% year-to-date as of June 9. The company posted its Q1 results on May 23, reporting a revenue of $1.12 billion, outperforming estimates by $15.25 million.
On May 24, Barclays analyst Jiong Shao maintained an Overweight rating on XPeng Inc. but lowered the price target on the stock to $30 from $39. The analyst told investors to “ignore” Q2 and said that his long-term thesis remains intact. The company’s production is steadily recovering and Q2 is “abnormal” due to the Shanghai lockdown and supply chain disruption, the analyst told investors. Shao observed that XPeng Inc. is positioned as one of the primary beneficiaries of the electric vehicle consumption stimulus.
According to Insider Monkey’s data, XPeng Inc. was part of 26 public hedge fund portfolios at the end of Q1 2022, compared to 29 funds in the last quarter. Philippe Laffont’s Coatue Management is one of the leading shareholders of the company, with 2.8 million shares worth $77.8 million.
You can also take a look at 10 Best Undervalued Dividend Stocks To Buy and 10 Best Recession Stocks To Buy.
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This article is originally published at Insider Monkey.
