China was the only major economy to witness growth last year as it recovered relatively rapidly from the coronavirus pandemic due to its strict and timely precautionary measures and a series of fiscal stimulus packages. The world’s second-largest economy closed 2020 with a…
10th consecutive month of expansion in its manufacturing sector. Moreover, the country’s retail sales are expected to grow 4%-5% in 2021, according to Blue Paper. The economy is expected to grow at a faster pace this year. Nomura and China International Capital Corporation expect the country’s GDP to grow 9% in 2021.
Amid trade tensions between the world’s two largest economies (U.S./China), investors have been regaining confidence in Chinese stocks. And the NYSE recently announced that it will no longer delist three Chinese telecom giants, China Telecom, China Mobile, and China Unicom. Investors’ interest in Chinese stocks based on a rosy economic outlook and the recent NYSE decision is reflected in Invesco Golden Dragon China ETF’s (PGJ) 12.9% gains over the past month, as compared to the S&P 500’s 0.7% gains over the same period.
Chinese stocks are expected to get a further boost soon because President-elect Joe Biden is expected to work on bringing back a degree of predictability and a level of normalcy to the U.S. foreign policy, which some observers believe will include a more productive relationship with China.
While some Chinese tech giants, like Alibaba Group Holding Ltd (BABA), have been struggling with strict Chinese regulatory supervision, we think t wise to buy shares of Pinduoduo Inc. (PDD – Get Rating), Baidu, Inc. (BIDU – Get Rating), Vipshop Holdings Limited (VIPS – Get Rating), and GDS Holdings Limited (GDS – Get Rating),which we think have immense growth potential.
Pinduoduo Inc. (PDD – Get Rating)
An e-commerce platform operator, PDD offers Pinduoduo, a mobile e-commerce platform. The company offers a range of products, including apparel, shoes, bags, mother and childcare products, food and beverage, electronic appliances, furniture and household goods, sports and fitness items, and auto accessories. The platform provides a range of online payment options including Weixin Pay, QQ Wallet, Alipay and Apple Pay.
For the third quarter ended September 30, 2020, PDD’s top line increased more than 89% year-over-year to $2.1 billion. While revenues from online marketing services and others increased 91.9% year-over-year to $1.9 billion, average monthly active users increased 50% year-over-year to 643.4 million. Its gross profit increased 92.8% year-over-year to $10.9 billion, and its EPS of $0.05 surpassed the Street estimate by 129.4%.
Analysts expect PDD’s revenue to increase 88.8% for the quarter ended December 31, 2020, 194% for the quarter ending March 31, 2021, and 55.3% in 2021. The company’s EPS is expected to increase 160% for the quarter ended December 31, 2020, 74.4% for the quarter ending March 31, 2021, and 275% in 2021. PDD’s earnings surprise history looks impressive too, with the company missing the consensus estimate in just one of the trailing four quarters.
PDD announced in December that…
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