In this article, we will discuss the 10 High Growth Chinese Stocks To Buy.
For several decades, China has consistently maintained its position as a major global economic force. One of the primary drivers of this success has been the manufacturing sector. China, as the world’s largest manufacturer, produces a vast array of products ranging from electronics to apparel. The country’s competitive edge in this field is facilitated by its sizable and relatively inexpensive workforce, as well as a government that has been eager to invest substantially in infrastructure and other manufacturing sector support. Despite that, China’s economic growth has slowed down recently, primarily due to factors like trade tensions with the US and the COVID-19 pandemic. However, in 2023, the Chinese economy has started to show signs of a rebound, generating significant interest among potential investors looking to gain exposure to Chinese equities.
As we move into 2023, China’s economic prospects look brighter as compared to 2022, which was a slow year in terms of GDP growth, largely due to the government’s Zero-COVID Policy. Recently, the government made a decision to loosen restrictions on its economy in order to learn to live with the Covid virus. The reopening of the economy is expected to provide a significant boost to growth.
Tina Teng, an analyst at CMC Markets, stated in an email to CNBC that the surge in China shares during the new year was largely due to the supportive monetary policy and positive outlook on reopening. Additionally, Teng explained that the measures taken to support the property sector and the easing of regulations on China’s technology companies also contributed to the gains. According to Teng, investors are moving their investments from fixed income to equity markets as China progresses toward reopening.
The United States has been moving to block China’s access to advanced semiconductor technology, and recently the Biden administration, through export controls, has barred US companies from exporting equipment to China that can be used in manufacturing advanced chips. On the other hand, although tensions between US and China remain high, the trade between the two countries hit a record last year, with trade of $690 billion between the two countries in 2022. Legendary investor and hedge fund manager Ray Dalio recently stated that China is emerging as the winner in the trade war with the United States.
“China’s winning the trade war if you just take the numbers – the percentage of world trade and dominance.”
Our Methodology
To come up with 10 high growth Chinese stocks to buy, we have used stock screeners available to identify high growth Chinese stocks. We screened Chinese stocks with at least 30% revenue growth over the past four quarters and at least $500 million in market capitalization. The year-over-year growth metric used to screen companies calculates the percentage change from the trailing twelve month revenues, compared to the twelve month’s prior.
10. Youdao, Inc. (NYSE:DAO)
Revenue Growth YoY: 34.22%
Established in 2006, Youdao, Inc. (NYSE:DAO) is a Chinese technology company that specializes in intelligent learning and online education services. The company is committed to developing and advancing technologies that provide educational content, applications, and solutions. Youdao, Inc. (NYSE:DAO) is divided into three divisions: learning services, learning products, and online marketing services. The Learning services division is responsible for generating roughly 50% of the company’s revenue through online courses. The Learning products division sells intelligent devices, such as the Youdao Dictionary Pen and Youdao Pocket Translator. Additionally, Youdao, Inc. (NYSE:DAO) earns revenue from online marketing services by offering various advertising formats, including banners, logos, text links, videos, buttons, and rich media.
In addition to Youdao, Inc. (NYSE:DAO), JinkoSolar Holding Co., Ltd. (NYSE:JKS), XPeng Inc. (NYSE:XPEV), and Daqo New Energy Corp. (NYSE:DQ) are included in our list of 10 high growth Chinese stocks to buy.
According to Insider Monkey’s database, 6 hedge funds had stakes in Youdao, Inc. (NYSE:DAO) at the end of the December quarter. Orbis Investment Management remained the leading stakeholder of the company at the end of the fourth quarter.
9. Zhihu Inc. (NYSE:ZH)
Revenue Growth YoY: 42.70%
Zhihu Inc. (NYSE:ZH) is a Chinese social networking platform. The platform is dedicated to providing users with high-quality knowledge-sharing content, and it has become one of the most popular Q&A communities in China. Zhihu Inc. (NYSE:ZH) offers a range of features, including question-and-answer sections, articles, live streaming, and online courses. The platform has a membership base of over 220 million users, with many users being experts in various fields. Zhihu Inc. (NYSE:ZH) generates revenue primarily from advertising and subscription services. It has a comprehensive advertising system that provides advertisers with a variety of advertising formats, including display ads, native ads, and search ads. Zhihu Inc. (NYSE:ZH) also offers a premium subscription service, which provides users with exclusive content, expert Q&A sessions, and other privileges.
At the end of Q4 2022, 9 hedge funds in Insider Monkey’s database were Zhihu Inc. (NYSE:ZH) at the end of the quarter. Yiheng Capital remained the leading stakeholder of the company at the end of Q4 2022
8. Chindata Group Holdings Limited (NYSE:CD)
Revenue Growth YoY: 50.30%
Chindata Group Holdings Ltd (NYSE:CD) is a Chinese company that specializes in offering hyper-scale data center solutions. Chindata Group Holdings Ltd (NYSE:CD) has two main businesses: colocation services and colocation rental. The colocation services business provides clients with a comprehensive range of services, including utilities, hosting, cooling, and server and equipment operation and maintenance. In contrast, the colocation rental business rents data center space in Malaysia to clients who use it for the housing of servers and other IT equipment. Chindata Group Holdings Ltd (NYSE:CD) has strategically placed data centers in China, India, and Southeast Asia, which makes the company well-suited to cater to the increasing demand for high-quality and secure data center services in the region.
As per Insider Monkey’s database, 20 hedge funds remained bullish on Chindata Group Holdings Limited (NYSE:CD) at the end of Q4 2022.
7. Full Truck Alliance Co. Ltd. (NYSE:YMM)
Revenue Growth YoY: 53.03%
Headquartered in Guiyang, China, Full Truck Alliance Co. Ltd. (NYSE:YMM) is a digital freight platform. Full Truck Alliance Co. Ltd. (NYSE:YMM) offers a wide range of services, including freight listing, matching, brokerage services, online transaction services, credit solutions, etc. In addition, Full Truck Alliance Co. Ltd. (NYSE:YMM) provides technology development and other related services.
19 hedge funds were long on the company’s stock at the end of the fourth quarter, according to Insider Monkey’s database. Farallon Capital had the biggest long position in the company at the end of Q4 2022.
6. Zai Lab Limited (NASDAQ:ZLAB)
Revenue Growth YoY: 70.62%
Zai Lab Limited (NASDAQ:ZLAB) is a Chinese biopharmaceutical company. It focuses on developing transformative therapies for cancer, infectious, and autoimmune diseases. The firm has built a robust pipeline of innovative drug candidates via strategic collaborations with global biopharma leaders and in-house research capabilities. With over 50 clinical trials underway, the company boasts of small and large-molecule manufacturing facilities and has offices in Shanghai, Beijing, Suzhou, Taiwan, Hong Kong, Guangzhou, Menlo Park, and Cambridge. As of March 31, 2022, Zai Lab Limited (NASDAQ:ZLAB) employed 1,999 people globally.
At the end of Q4 2022, 22 hedge funds in Insider Monkey’s database were long Zai Lab Limited (NASDAQ:ZLAB). Segantii Capital remained the leading stakeholder of the company at the end of Q4 2022.
Here is what ClearBridge Investments International Growth ACWI ex-U.S. Strategy has to say about Zai Lab Limited (NASDAQ:ZLAB) in its Q4 2021 investor letter:
Economies in Asia, meanwhile, are taking the opposite approach on stimulus, with China lowering its reserve requirement ratio for banks to support flagging growth in the world’s second-largest economy. Japan’s new government passed a large stimulus bill after its economy contracted in the third quarter. Despite these actions, sentiment remains decidedly negative in these regions. Our underweight to Japan proved beneficial during the quarter while our single holding in China – biotechnology company Zai Lab – sold off sharply mostly due to generally weak sentiment around Chinese health care stocks.
5. BYD Company Limited (OTC:BYDDF)
Revenue Growth YoY: 72.10%
BYD Company Limited (OTC:BYDDF) is a prominent multinational corporation based in China, specializing in the development, manufacturing, and sales of electric vehicles and associated products. The company boasts a global presence, operating in over 70 countries across six continents, with approximately 30 industrial parks in around 400 cities.
BYD Company Limited (OTC:BYDDF) recently announced that it is expecting more than five times the net profit it had achieved in the previous year. With a record-breaking sale of 1.86 million cars, the company anticipates an impressive 2022 net profit. Matthias Volkert, an analyst at DZ Bank, currently has a price target of HK$250 on BYD Company Limited (OTC:BYDDF)’s stock.
4. Li Auto Inc. (NASDAQ:LI)
Revenue Growth YoY: 86.29%
Li Auto Inc. (NASDAQ:LI), a Beijing-based company that specializes in the development and sale of smart electric vehicles, specifically sport utility vehicles (SUVs), under the brand name Li ONE. The company’s flagship product is equipped with an extended-range electric powertrain, and it offers other peripheral products and services such as charging stalls, vehicle internet connection services, and extended warranties. Li Auto Inc. (NASDAQ:LI)’s model lineup includes the six-seater premium family SUV, Li L9, the six-seat premium family SUVs, Li L8 and Li ONE, and the five-seat flagship family SUV, Li L7.
In February 2023, Jeff Chung, an analyst at Citibank, raised his price target on Li Auto Inc. (NASDAQ:LI) to $51.50 while maintaining a Buy rating on the stock. Chung revised his 2023 sales forecast from 210,000 to 235,000 units, citing recent new product launches.
According to Insider Monkey’s database, 25 hedge funds held stakes in Li Auto Inc. (NASDAQ:LI) at the end of the fourth quarter ending December 2022. Viking Global remained the leading stakeholder in the company at the end of Q4 2022.
3. XPeng Inc. (NYSE:XPEV)
Revenue Growth YoY: 98.06%
XPeng Inc. (NYSE:XPEV) is a prominent Chinese electric vehicle manufacturer. The company is engaged in the design, manufacture, and distribution of electric vehicles, including cars, SUVs, and minivans. XPeng Inc. (NYSE:XPEV) has three primary vehicle brands, the Xpeng P5, P7, and G3, designed to offer consumers exceptional long-range, high-performance electric vehicles with cutting-edge features like a smart cockpit, autonomous driving, and advanced infotainment systems. To enhance the overall electric vehicle experience, XPeng Inc. (NYSE:XPEV) has also introduced its XPeng Energy Solutions program. This service offers users energy management solutions and charging services to optimize their electric vehicle experience. Furthermore, XPeng Inc. (NYSE:XPEV) also provides auto finance solutions and high-quality parts and accessories under the XPeng Parts brand.
As per Insider Monkey’s database, 17 hedge funds owned stakes in XPeng Inc. (NYSE:XPEV) at the end of the December quarter. Two Sigma Advisors was the most bullish fund on the company’s stock at the end of Q4 2022.
2. JinkoSolar Holding Co., Ltd. (NYSE:JKS)
Revenue Growth YoY: 105.27%
Jinko Solar Co., Ltd. (NYSE:JKS) is an innovative and renowned solar technology company that focuses on integrated photovoltaic products and clean energy solutions. With over 3,000 clients in more than 160 countries, XPeng Inc. (NYSE:XPEV) has shipped over 130GW of cumulative module shipments, making it the number one global module shipper from 2016 to 2019. The company is among the first few companies to establish a “vertically integrated” production capacity from silicon material processing to wafer, cell, and module production, with 14 production bases across China, the United States, Malaysia, and Vietnam. Jinko Solar Co., Ltd. (NYSE:JKS) has a combined production capacity of 65GW for monocrystalline silicon wafers, 55GW for cells, and 70GW for modules, demonstrating its track record of innovation and quality.
According to Insider Monkey’s database, 15 hedge funds held shares of the company at the end of the fourth quarter of 2022. Hillhouse Capital Management was the most bullish fund on the company’s stock at the end of Q4 2022.
1. Daqo New Energy Corp. (NYSE:DQ)
Revenue Growth YoY : 170.39%
Daqo New Energy Corp. (NYSE:DQ) is a manufacturer of high-quality polysilicon. Operating in two segments, namely Polysilicon and Wafer, the company offers a diverse range of products and services to photovoltaic manufacturers. Daqo New Energy Corp. (NYSE:DQ)’s ready-to-use polysilicon is packaged to meet customers’ specific needs, facilitating the production of ingots, wafers, cells, and modules for solar power solutions. The company also provides wafers through its downstream photovoltaic product manufacturing business and offers wafer original equipment manufacturer (OEM) services to external customers through tolling agreements and processing polysilicon to produce ingots and wafers. Daqo New Energy Corp. (NYSE:DQ)’s annual capacity of approximately 12,150 metric tons (MT) for polysilicon and 90 million pieces for wafers allows the company to meet the demands of its customers globally.
As per Insider Monkey’s database, 20 hedge funds remained bullish on Daqo New Energy Corp. (NYSE:DQ) at the end of Q4 2022. Hillhouse Capital Management had the biggest stake in the company at the end of the fourth quarter.
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Disclosure: None. 10 High Growth Chinese Stocks To Buy is originally published on Insider Monkey.
