In this article, we will discuss the 11 most profitable Chinese stocks.
According to the World Bank, China has the second-biggest economy in the world as of 2021, with a GDP of $17.73 trillion. The size of the global GDP stood at $96.51 trillion at the end of 2021. The US and China, as the two leading economies of the world, make up more than 42% of the global economy. It must be noted that the Chinese economy shrunk by 2.2% during the peak of the COVID-19 pandemic in 2020 as it adopted a zero-COVID policy. However, the economy bounced back and grew by 8.1% in 2021 following the relaxation of lockdowns and restrictions, reflecting the fastest GDP growth for the Chinese economy since 2012. The stellar GDP growth was due to pent-up demand as a mass movement was restricted during the peak of the COVID-19 pandemic in 2020. However, according to the Chinese National Bureau of Statistics, the economy experienced weak GDP growth of only 3% during 2022 due to supply chain disruptions, lockdowns due to the zero-COVID policy, and global economic uncertainty following the start of the conflict between Russia and Ukraine.
In a report to the Communist Party, Chinese President Xi Jinping shared that he wants the country to become a “medium developed country” in the next 10 years. According to Morgan Stanley analysts, in order for China to achieve its objective of becoming a moderately developed country, its per capita GDP would need to increase from $12,500 in 2021 to $20,000. Furthermore, an average annual GDP growth rate of approximately 4.7% would be necessary during the next decade. Xi Jinping’s goals highlight that economic growth remains a key priority for the country. A positive outlook on the future of the Chinese economy warrants a keen interest in Chinese corporations. If you want to read about some of the stocks gaining attention in the market, you can also go to the 10 Most Promising Chinese Stocks According to Analysts.
Evolving Dynamics of China-US Relations
In addition to growth, China is now placing an increased emphasis on achieving economic self-sufficiency and technological independence, which reflects strained relations with the US. On February 23, Janet Yellen, the Treasury Secretary of the United States, stated that talks on economic matters with China would continue “at an appropriate time.” This comes as Beijing is selling its significant holdings of Treasuries and as Washington cautions against possible violations of sanctions related to Russia. During a news conference in Bengaluru, India, ahead of a G-20 financial leaders meeting, Yellen told CNBC’s Tanvir Gill that she did not have a specific timeline for the resumption of economic talks with China, but she believed it was important to have those discussions. The Treasury Secretary also highlighted several areas where the US. and China need to collaborate to address global challenges, such as climate change and food security. According to Yellen, maintaining effective communication between the two nations is crucial for the macroeconomic and financial situations domestically and globally.
A Bullish Outlook Amid Global Uncertainty
Due to optimistic economic predictions for China’s post-pandemic recovery, foreign funds are increasingly investing in Chinese stocks. This surge in investment represents the highest rate of foreign investment in Chinese stocks in at least five years. In the first two weeks of 2023, global funds purchased over $9 billion worth of A shares through the Stock Connect, representing the highest amount invested since at least 2018. KraneShares, an asset management firm based in New York, highlighted in a report on Wednesday that China’s mainland stock market is among its top recommendations for investment in 2023. The report suggested that due to the significant sell-off in 2022, the market is still relatively under-invested and could experience a “coiled spring” effect, resulting in an upsurge in earnings growth. Some of the most profitable Chinese stocks in the market include Bank of China Limited (601988.SS), Tencent Holdings Limited (0700.HK), and China Construction Bank Corporation (601939.SS).
Our Methodology
We have shortlisted the 11 most profitable Chinese stocks on the basis of their trailing 12 months’ net income. We further narrowed down our research to only include companies that reported over $10 billion in net income over the last 12 months. Most of the companies included in the list are a part of the 2022 Forbes Global 2000 list, which ranks the world’s largest companies based on revenue, assets, profits, and market capitalization. The companies have been ranked in ascending order of their net income.
Most Profitable Chinese Stocks
11. Bank of Communications Co., Ltd. (601328.SS)
Trailing 12 months Net Income: $13.34 billion (¥91.04 billion)
Bank of Communications Co., Ltd. (601328.SS) (BOCOM) is a Shanghai-based bank that was established in 1908. The bank had the distinction of being one of the earliest note-issuing entities in China.
Bank of Communications Co., Ltd. (601328.SS) has a headcount of 90,238 employees and holds the 62nd position on the 2022 Forbes Global 2000 list. The bank has an asset base of $1.8 trillion, with a top line of $76 billion as of 2022. Bank of Communications Co., Ltd. (601328.SS) anticipates net income growth of 7.21% in 2023 as opposed to 4.75% in 2022. Experts believe that the banking sector’s net interest margin (NIM) is expected to receive a boost in the last two quarters of 2023 as the Chinese economy expands.
10. Ping An Insurance (Group) Company of China, Ltd. (601318.SS)
Trailing 12 months Net Income: $14.12 billion (¥96.44 billion)
Ping An Insurance (Group) Company of China, Ltd. (601318.SS) is a Shenzhen-based diversified financial services company founded in 1988. The company has 225 million retail customers and 668 million online users using its asset management, banking, financial technology, insurance, and healthcare services as of 2022.
The company occupies the 17th position on the 2022 Forbes Global 2000 list with an asset base of $1.59 trillion and an annual top line of $181.4 billion. Ping An Insurance (Group) Company of China, Ltd. (601318.SS) brought on leading global financial entities like Goldman Sachs and Morgan Stanley as its shareholders way back in 1994 and achieved the feat of becoming the first Chinese financial services entity to have foreign investors.
9. CNOOC Limited (600938.SS)
Trailing 12 months Net Income: $15.94 billion (¥108.88 billion)
CNOOC Limited (600938.SS) is a Beijing-based producer of crude oil and natural gas through offshore operations. The company is continuing to expand its operations through 22 commercial discoveries in 2021.
In 2021, CNOOC Limited (600938.SS) reported net production of 573 million barrels of oil equivalent (BOE), which was higher than the initial target set by the corporation. Although the company was delisted from the New York Stock Exchange (NYSE) and Toronto Stock Exchange (TSX) in 2021, it listed its shares on the Shanghai Stock Exchange (SSE) in April 2022. On the first day of trading, the shares of CNOOC Limited (600938.SS) jumped as much as 44%, which resulted in a 30-minute trading halt. CNOOC Limited (600938.SS) offers an attractive dividend yield of 7.63% as of February 23.
8. China Mobile Limited (0941.HK)
Trailing 12 months Net Income: $18.71 billion (¥127.50 billion)
China Mobile Limited (0941.HK) is a Beijing, China-based provider of information communication technology (ICT) founded in 1997.
The company has a headcount of 446,068 employees, a total mobile customer base of 970 million, and a wireline broadband customer base of 256 million as of June 2022. China Mobile Limited (0941.HK) also had 614 million 5G users as of December 2022. The company is the biggest mobile telecommunications entity in the world based on the number of subscribers. China Mobile Limited (0941.HK) conducted the biggest initial public offering (IPO) in over a decade on the SSE in December 2021. Meanwhile, it was the second-biggest IPO globally for that respective year.
7. China Merchants Bank Co., Ltd. (600036.SS)
Trailing 12 months Net Income: $19.5 billion (¥133.23 billion)
China Merchants Bank Co., Ltd. (600036.SS) is a Shenzhen-based bank established in 1987 that provides a diverse range of financial products and services through its 143 branches and 1,711 sub-branches spread across 130 mainland Chinese cities. The bank has a headcount of over 100,000 employees.
China Merchants Bank Co., Ltd. (600036.SS) holds the 24th position on the 2022 Forbes Global 2000 list. Furthermore, the bank has been selected as the “Best Bank in China” by Euromoney for four consecutive years, from 2019 to 2022. The bank has the seventh-highest asset base and the fifth-highest net income in the Chinese banking industry, reflecting strong operational efficiency. The bank is known as the “King of Retailing,” with 182 million retail banking customers as of 2022.
6. PetroChina Company Limited (601857.SS)
Trailing 12 months Net Income: $20.10 billion (¥137.32 billion)
PetroChina Company Limited (601857.SS) is a Beijing-based integrated energy company established in 1999 as part of the restructuring of China National Petroleum Corporation (CNPC).
The company holds the 21st position on the 2022 Forbes Global 2000 list and is the fourth-biggest integrated energy company on the list. The increase in crude oil prices played a significant role in aiding energy companies to climb the Forbes Global 2000 list. PetroChina Company Limited (601857.SS) is the biggest crude oil and natural gas producer in Asia and the second biggest refiner of crude oil in China as well.
In addition to PetroChina Company Limited (601857.SS), Bank of China Limited (601988.SS), Tencent Holdings Limited (0700.HK), and China Construction Bank Corporation (601939.SS) are also some of the most profitable Chinese stocks.
5. Tencent Holdings Limited (0700.HK)
Trailing 12 months Net Income: $22.54 billion (HK$176.93 billion)
Tencent Holdings Limited (0700.HK) is a Shenzhen-based internet and technology conglomerate company that is one of the biggest revenue-generating entities in the media sector.
The company secured the 28th position on the 2022 Forbes Global 2000 list. Tencent Holdings Limited (0700.HK) also owns instant messaging services like WeChat and WeCom. WeCom achieved a key milestone by catering to the needs of 5.5 million companies and reaching 130 million monthly active users (MAUs) in December 2020. Meanwhile, WeChat has 1.3 billion users on its platform as of 2022. Tencent Holdings Limited (0700.HK) is also the home to QQ, a web portal and instant messaging software platform that provides group and voice chat, microblogging, movies, music, and shopping services.
4. Bank of China Limited (601988.SS)
Trailing 12 months Net Income: $33.10 billion (¥226.12 billion)
Bank of China Limited (601988.SS) is a Shanghai-based majority state-owned bank established in 1912.
Bank of China Limited (601988.SS) went public in 2006. The company has the honor of becoming the banking partner for the 2017 Paralympic Winter Games and 2022 Olympics. The bank is not only present in China but also has a presence across 57 other countries. Bank of China Limited (601988.SS) ranks 13th on the 2022 Forbes Global 2000 list and is also a member of the Financial Stability Board’s (FSB’s) Global Systematically Important Banks (G-SIBs) list for 2022.
3. Agricultural Bank of China Limited (ABC) (601288.SS)
Trailing 12 months Net Income: $36.88 billion (¥251.98 billion)
Agricultural Bank of China Limited (ABC) (601288.SS) is another of the big-four banking entities of China on our list of the 11 most profitable Chinese stocks.
The bank has 2.7 million corporate clients and conducts its operations through 24,000 branches. Agricultural Bank of China Limited (601288.SS) is the third biggest lender in China based on assets. It is also (601288.SS) one of the 30 banks on the 2022 list of G-SIBs formulated by the FSB in corporation with the Basel Committee. Agricultural Bank of China Limited (601288.SS) is also a market leader in the field of environment, social, and governance (ESG) based on its investment principles, according to Euromoney.
2. China Construction Bank Corporation (601939.SS)
Trailing 12 months Net Income: $46.49 billion (¥317.64 billion)
China Construction Bank Corporation (601939.SS) is considered one of the four biggest banks in China. The Beijing-based bank was founded in 1954 and presently holds the fifth position on the 2022 Forbes Global 2000 list.
The bank is involved in providing a wide variety of financial products and services through its personal and corporate banking operations. China Construction Bank Corporation (601939.SS) has over 13,600 local branches in China with a total asset base of over $4.56 trillion. The bank intends to focus on supporting the economic stability and recovery of the Chinese economy under the principles outlined by President Xi Jinping. China Construction Bank Corporation (601939.SS) is also a constituent of the 2022 FSB’s G-SIBs list.
1. Industrial and Commercial Bank of China Limited (ICBC) (601398.SS)
Trailing 12 months Net Income: $48.30 billion (¥362.34 billion)
Industrial and Commercial Bank of China Limited (ICBC) (601398.SS) is a Beijing-based commercial bank that was established in January 1984.
The bank currently has 259 million personal banking customers and 4.12 million corporate banking customers with operations in Asia, Europe, North America, Oceania, and South America. Industrial and Commercial Bank of China Limited (ICBC) (601398.SS) ranks second on the Forbes Global 2000 list for 2022 after losing its top position to Berkshire Hathaway Inc (NYSE:BRK-B). Industrial and Commercial Bank of China Limited (ICBC) (601398.SS) occupied the top position for the past nine consecutive years. ICBC also has the distinction of being on the 2022 G-SIBs list formulated by the FSB and Basel Committee.
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Disclosure: None. 11 Most Profitable Chinese Stocks is originally published on Insider Monkey.
