BAT refers to Baidu.com (BIDU-Q),Tencent Holdings Ltd (0700-HK), Alibaba Group Holding (BABA-N) that is often compared to the FANG stocks (Facebook (FB), Amazon (AMZN), Netflix (NFLX), and Alphabet (GOOG).
These three stocks large Chinese internet stocks have a large domestic markets so they can pull ahead of some American firms in some areas. The other stock suggestions are also Chinese stocks, but alternatives to tech.
Here are the top growing Chinese companies.
Sinopec Shanghai Petrochemical (SHI-N)
China’s largest petrochemical company. They synthesize materials from crude oil. Their 9-months net profit is up 13.6% year to year.
She owns the parent company. A good business. They are losing money on the production front because of where oil prices are, and are actually cutting a lot of capital spending to try and maintain as much as they can of free cash flow. This is more of a dividend play. A good, longer-term hold.
They are a producer and distributor of oil and gas out of China. They also engage in exploration. They are state backed and so they have some stability. Their net profits for 2018 and expected to rise.
A subsidiary of the Chinese National Oil Company. Biggest and most profitable company in China. Very strong internationally. Essentially a duopoly in China and basically control the wholesale/retail market with Cinipaq. Stock is known to pull back hard, so would take some profits and buy back in the $150 range.
Alibaba Group Holding (BABA-N)
An e-commerce site that is China’s answer to Amazon. They also have a payments service, Alipay, and have entered the financial business. They also offering cloud
He targets $301. Should be a core holding for anyone. It's one of the 10 biggest companies in the world, the king of e-commerce in China. They've transformed from an online distribution platform into a technology enabler, like the cloud and digital payments. It's a broad, deep stock.
Tencent Holdings Ltd (0700-HK)
They own WeChat, which is a ubiquitous messaging application in China and Asia. They’re also working on creating an “app for everyone” through WeChat, where users can pay, and online gaming, among other features.
Challenge with Chinese stocks is when you invest in China, you don't actually hold the shares in your name. From a political perspective, you don't have claim to those assets. Now we have US-China tensions. He'd rather buy one of the multinational companies with operations in China that benefit from the recovery.
China’s largest search engine. With Google leaving China in 2010, the Chinese company has grown in an almost monopolistic way. It controls about 80% of the Chinese market. Baidu is similar to Google in the way that they offer other services, such as maps, social media, music, artificial intelligence, etc.
He avoids Chinese companies--heard too many horror stories. Google is growing faster than Baidu, and he prefers Google if you want an internet stock.
China Mobile Hong Kong (CHL-N)
They offer telecommunications and internet-related services in Mainland China and Hong Kong. They offer these services in all cities, and counties in their service area, and they are investing in their 4G network now.
He does not own it, but has looked at it. He is a little concerned about seeing all the information, being that it is a Chinese company. He would look for a different global telco player.
Ping An Insurance Group (2318-HK)
They are a personal financial services provider offering products and services in insurance, banking, investment, and Internet finance. They are also an asset manager, including investment, trading and brokerage. They recently announced a share repurchase plan, and their net profits rose year to year.
This is the largest life insurance company in China. It is a diversified, with 2/3 of their business life and nonlife, but they also have Ping An Bank and Ping An Trust, which issues wealth management products. She likes the insurance as a secular growth theme because of the big savings pool. People in China…
China Construction Bank Corp (0939-HK)
A commercial bank that operates through corporate banking businesses. They operate domestically and overseas. They had a shake-up in the executive composition late last year but profits are up, and they are still investing heavily, especially with the Chinese government.
Although cautious on the banks, she does own this one. It is the more conservative of the Chinese banks. A very inexpensive stock. Has earnings growth of 10%-11%, and is trading at around 5X earnings. She is starting to see a recovery in spending, and banks tend to participate in that.
Industrial & Commercial Bank of China Ltd (1398-HK)
This is one of the “Big Four” state-owned commercial banks, and is the biggest bank in China. They are also the largest bank worldwide by total assets, customers, and employees. They invest heavily in government projects and in growing areas of the Chinese economy, as well as overseas. They operate in three segments: Corporate Banking, Personal banking and Treasury.
Fundamentally, do you really want to own Chinese banks here right now? A lot of the big banks in China actually have big government stakes and they have to invest in the growing portions of Chinese economy. Banking regulations for new banks have been very difficult to get. There are obviously some well-publicized issues with…