Remember, past performance is not a guarantee of future results. Every investment decision should be based on a thorough analysis of market conditions and the prospective investment itself.
Best Chinese shares to consider buying in 2023
- Tencent
- Alibaba
- Industrial and Commercial Bank of China
- JD.com
- BYD
- Baidu
- Agricultural Bank of China
- Nio
- NetEase
- Pinduoduo
Tencent
Tencent remains the largest Hong Kong-listed Chinese firm by market capitalisation at over 3 trillion yuan with the domestic gaming arm of their business accounting for 73% of revenue in 2022.
Results-wise, the company saw its revenue climb 11% year-on-year (YoY) to 150 billion yuan ($21.4 billion) in the first quarter of 2023. Analysts at Refinitiv had expected Tencent to report a revenue of 146.07 billion yuan.
Adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) rose 39% YoY to 52.66 billion yuan.
Despite local restrictions being lifted, Tencent continues to expand into international territory.
Alibaba
The Alibaba share price is down over 5% compared to the previous fiscal, as the Chinese economy continues to show signs of sluggishness.
Alibaba’s revenue for its March-ending quarter came in higher than expected at 208.2 million yuan ($30.3 million), an increase of 2% YoY.
Meanwhile, non-GAAP diluted earnings per American depository share (ADS) increased 35% YoY to 10.76 yuan ($1.56).
In March 2023, Alibaba announced new structures for its organisation and governance, splitting the business into six pieces effectively dispersing monopoly power.
Combined with lower stock prices, this restructuring may be a precursor to growth over the long term.
Industrial and Commercial Bank of China Limited
Industrial and Commercial Bank of China Limited (ICBC), has a market cap of HK$2.0 trillion (1.78 trillion yuan). This makes it the world’s third largest bank, behind and Bank of America (BoA).
The state-owned bank’s Hong Kong listing was trading as low as HK$5.27 as of 9 May 2023.
Economic stimulus introduced in the last quarter by the State Council, China’s cabinet, helped to lift the stock above the two-year low of HK$3.95.
Nevertheless, the stock’s value has only increased by 3.9% in the last year, prompting some analysts to continue calling it ‘undervalued’.
JD.com
The second largest Chinese e-commerce group’s shares fell by nearly 19% in April 2023, thanks to the country’s continued tensions with the US. Add this to rising youth unemployment and you’ll find a likely cause for the drop in JD.com.
However, despite those obstacles, the online retailer and Alibaba competitor recorded a revenue of 243.04 billion yuan ($35.4 billion) in the last quarter of 2022. That’s an increase of 1.4% from the same quarter a year before.
Net product revenues increased by 4.3% YoY, while net service revenues increased by 34.5% from a year ago.
BYD
The Warren Buffet-backed automaker, founded in 1995, has pivoted away from traditional car manufacturing toward high-tech solutions.
Instead, they’ve dedicated their business to sustainable development in electronics, new energy and rail transit.
BYD, short for Build Your Dreams, became the best-selling electrical vehicle brand globally in 2022. The company sold a record-breaking 1.8 million units in 2022, nearly tripling their sales from 2021 and outpacing competitor Tesla by a significant margin.
In the first quarter of 2023, a further 552,076 vehicles were sold. BYD’s operating income rose to 120.174 billion yuan ($17.3 billion), an increase of 79.8% YoY. Citic Securities predict that sales of new energy vehicles is likely to rise 31% a year in China, showing that there’s investment potential in this industry giant.
Baidu
The search engine company’s revenue for Q1 of 2023 came in at just over 31.4 billion yuan ($4.5 billion). This came on the back of their heavy-weight rival, Google, pulling out of the Chinese search market due to geopolitical tension.
Baidu now accounts for over 70% of the total market share and has plans to pursue e-commerce and online video avenues with gusto.
Shares have reached highs of $160.88 in the last quarter and free cash flow in the company was 3.5 billion yuan.
As China continues to be one of the largest populations globally, Baidu maintains a monopoly on the local market.
Agricultural Bank of China
One of the ‘Big Four’ banks in China, Agricultural Bank of China (AgBank) shares continue to plummet, due to the ongoing mortgage boycott crisis on unfinished projects in China.
The bank revealed in its latest financial report that the real amount of overdue loans was nearly double the initial projection at 1.23 billion yuan ($178 million).
As a result, AgBank’s net-interest margins continue to shrink according to Fu Wanjun, the company’s president.
However, they may have turned a corner and reported over 7% growth in net annual profits in early May. This recovery could be something investors will want a stake in.
Nio
The value of the world’s second largest electric vehicle maker has been on a slight uptrend of late.
The Shanghai-based company results claim they’ve delivered over 122,000 vehicles in 2022, an increase of 34% YoY. However, Nio did report weaker sales at the start of 2023.
Stock prices have fallen over 39% in the last year and are trading at just $8 in April 2023.
This shows a return to levels last seen in 2020. Overall, the company’s reported total revenue of 49.5 million yuan, an increase of 36.3% from the year before.
NetEase
The internet and online gaming services provider announced Q1 net revenues of 25 billion yuan ($3.6 billion), a 6.3% increase from the previous year.
With several new games in the works, NetEase is establishing their foothold in international markets, just like competitor Tencent. Net revenue from this sector of the business increased 7.6% YoY at 20.1 billion yuan ($2.9 billion).
While earnings growth over the last year is below the five-year average, it’s still exceeding the industry as a whole.
The stock is trading at $88.35 as of 12 May 2023 leading up to their 2023 Q1 financial results release later in May.
Pinduoduo
Pinduoduo is China’s largest e-commerce platform specialising in agriculture products.
The multinational business recorded total revenues of 37.64 billion yuan ($5.48 billion), an increase of 58% from the same quarter of 2022. Even more impressive is the 130% increase in non-GAAP2 operating profit for Q1 – namely 8.46 billion yuan ($1.23 billion).
More recently, Pinduoduo’s parent firm PDD Holdings, has moved its headquarters to Ireland. This further solidifies its international presence and may be a move to take advantage of Irelands relatively low headline corporation tax.
This change coupled with the upgrade in their Relative Strength Rating (from 73 to 82) may provide an opportunity for investors looking for Chinese stocks.
How to take your position on Chinese shares
- Pick the share you want to take a position on
- Open or log in to your CFD account
- Decide on your position size and open your trade
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