To The Moon

Among the stocks that underperformed the worst in 2021 were Chinese growth stocks. Starting at the end of 2020, Chinese regulators saw fit to put their foot down, hard, on the throats of many Chinese tech stocks. Companies saw crackdowns on monopolistic practices, massive fines, forced de-listings, removal off apps from app stores, the regulating out of entire sectors and more. Indeed, for many Chinese growth stocks, last year was a year to forget.

Here’s the good news: We’re now in 2022. You know, new year, new you. For Chinese growth stocks, investors certainly may hope this is the case. There are a number of reasons why investors may want to pay attention to Chinese growth stocks. China’s a massive economy that’s still developing. The country’s middle class is massive and growing. And despite slower population growth than China would like to see, it’s still growing faster than most of the developed world.

For those willing to take a bullish stance on China, here are top stocks to keep an eye on right now:

$JD.com(JD)$

One of the top e-commerce stocks in China is JD.com. This stock is one that has generally outperformed its peers, even through this period of market uncertainty last year. A company with a business model that resembles Amazon in many ways, JD.com is an e-commerce giant in China. This company sells a wide array of products, from clothes to electronics.

Unlike a few of its peers, JD has actually come through this regulatory environment relatively unscathed. However, it’s the fact that this is a China-based company that has investors concerned. The degree to which investor capital is safe in China is of key concern to investors. Despite the government’s restrictions on the internet, JD.com revenue rose 32%to $33.9 billion in its latest quarter. With an operating cash flow of $6.4 billion, this company can easily fulfill its plans to expand in 2022.

JD.com has plans to revamp its online and offline strategy to overtake Alibaba as the industry leader. The company has suggested an expansion project to enter into fast-growing market of pharmacies, electronics and appliances. Accordingly, this is a stock many long-term investors have on their radar as a key Chinese growth stock to own.

$Dingdong (Cayman) Limited(DDL)$

One of the Chinese IPOs to take the market by storm, DingDong listed on the NYSE in mid-2021. After surging to $46 per share on its debut, shares of this e-commerce company have since dwindled to around $7 per share. That’s good for a loss of nearly 90% from its peak. For any company, that’s one heck of a loss. For an e-commerce player in China, this discount may be too good to ignore.

Dingdong can be viewed in some ways as the “Uber Eats” of China. This company provides daily essentials and fresh food to clients all over China. The company targets a 29-minute delivery time. It renders its services in 29 cities and caters to a monthly user base of 6.9 million customers.

Even though DDL stock has underperformed since its listing, this company is fortunately gaining a leadership position in the grocery market. The Chinese daily necessity market is estimated to grow at an annual rate of 7% through 2025. This could make Dingdong the leader of a market worth $2.4 trillion.

$Alibaba(BABA)$

Alibaba was among the hardest-hit Chinese tech stocks last year. Generally considered to be the catalyst for this tech-related crackdown, Alibaba’s monopolistic practices were the focal point of regulators for much of last year. The company was slapped with a $2.8 billion fine, and its Ant Group IPO was shelved.

However, for those looking at the bigger picture, most of these regulatory headwinds are behind Alibaba. Often called the “Amazon of China,” Alibaba’s e-commerce footprint in China and in many southeast Asian countries is impressive.

After falling 52% in one year, the investors and shareholders of BABA can now breathe a sigh of relief. So far in 2022, this stock has mostly risen, reaching a peak of $138.70. It has retracted slightly from this peak but is still ahead of its December low. Despite a disappointing year, Wall Street remains bullish about the long-term fundamentals of Alibaba. As China follows a stringent lockdown policy, new Covid-19 variants like omicron are a boon for this company’s earnings and sales.

Furthermore, to rebuild the trust of shareholders and boost growth in 2022, Alibaba has announced various structural changes. The company is set to open a domestic and international commerce unit. The latter, under Ali Express, will focus on markets in Europe and South America. Alibaba has a legacy that it continues to maintain. Despite tumbling prices, the revenue of this company has grown at a compound annual growth rate of 42% since 2018. This leads to a very bullish long-term outlook for this stock.

$XPeng Inc.(XPEV)$

China is home to the world’s largest and fastest-growing electric vehicle market. However, this market is highly competitive. Xpeng Motors, BYD, Li Auto and Nio fight hard in the title race to become the industry leader.

In December 2021 alone, Xpeng sold 16,000 EVs, which was a 181% YoY increase. On top of that, deliveries for the whole year rose 263% as it sold 98,155 EVs in 2021. XPEV did stumble in the latter half of 2021, reaching a low just below $34. So far in 2022, XPEV stock is down 23%.

In 2022, Xpeng will expand its model portfolio. In Q3 of 2022, its new model G9 SUV will come into the market. Furthermore, this company will soon make an entrance into the second-largest EV market. It already sells G3 SUVs in Norway, but now has plans to expand to Sweden, the Netherlands and Denmark. It will hopefully boost sales and make the share prices reach an all-time high.

$BYD Co., Ltd.(BYDDF)$ $BYD COMPANY(01211)$

In the competitive Chinese EV market, if one EV maker had the highest probability of becoming the industry leader, it would be BYD. The company makes electric cars and buses, and compared to its competitors, BYD is far ahead in sales and profitability.

BYD Co. started manufacturing automobiles in 2002, and now 53% of its revenue comes from that segment. BYD’s automobile deliveries jumped 218% year-over-year to 92,823 in December of 2021. The sales numbers are way above those of any other Chinese EV maker, like Li Auto, Nio and Xpeng. Furthermore, including EV and hybrid sales, BYD goes ahead to even beat Tesla’s China sales.

For the past two years, this company’s average revenue has grown at an annualized rate of 30%. To top it off, considering its outperformance, BYD’s stock trades at a far more valuable price ($31.14 at the start of Jan. 24) than its competitors.

BYDDF’s listing in Hong Kong indeed means that the stock is prone to major dips, ups and downs and corrections. But fortunately, this saves BYD from the fear of being delisted from the USA’s stock market.

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