I have warmed up to China in the past years.
We have seen how Chinese companies in various industries took the world by storm.
First we had electric cars with BYD. We had retail with Miniso. We had the Deepseek moment where AI models made in China competed effectively with US models. This is also true with Baidu and Alibaba’s models. We have seen Chinese tech companies like Temu and Shein take over marketshare globally.
There is no doubt that China will dominate the world’s economy more and more.
That isn’t to say that the west does not keep some dominance in key sectors, such as AI with Alphabet or ASML, or fashion and culture, and healthcare with decades of experience. But the world is now multipolar.
Therefore I have increased my interests in China. I don’t want to say that I am an expert in China, not at all, but I do have some experience in deep value investing.
This is how you avoid micro analysing quarters and products, generating noise that blurs the big picture.
A few years ago Alibaba was winning everything, then it was JD, then it was PDD, now PDD is retreating a bit, and every time, Chinese experts told us to buy the hot company of the day and ignore the others.
The results of these calls were not great to say the least, because the hot company was already well valued by the market, or because the hot company was just about to discover the biggest force of capitalism: competition and imitation.
So take a seat and enjoy the 8 following picks:
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1.Haier Smart Home (Trading in Germany)
Shares of equipment maker Haier dropped in Hong Kong and the company now trades at 9 times earnings.
This is a growing company with a long term track record in appliances, and a growing focus on HVAC.
The German listing on the XETRA trades at a 18% discount (8 times earnings) and offers a 8% dividend yield.
The last results are not great but ok.
5% basic EPS growth for 2025 is not that great, but Haier has been a long term compounder with M&A, organic growth and local demand and should continue to do so, on top of a good dividend.
2-Miniso Group
Ah, the little retail company that is growing like weeds and building a scale moat across the world. Its ability to collaborate with IP owners like Disney or Kuromi and roll out items worldwide is unmatched. It has strong China exposure at 54% of sales in Q4.
Let’s review the last earnings: