The pandemic-led recession has shrunk economies all over the world, and China is no exception. In the first quarter of 2020, when the People's Republic of China enacted statewide lockdowns at the height of its Covid-19 outbreak, the country's GDP sank by 6.8%. In the first quarter of 2021, China's GDP expanded 18.3%, up from 6.5% in Q4 2020, as the COVID-19 situation improved in the country, backed by a high demand for industrial production and exports. According to a Nikkei survey, China's economy is bound to grow 7.7% in the second quarter, driven by strong exports.
JPMorgan strategists are bullish on Chinese tech stocks despite the regulatory regime imposed by the Beijing-based State Administration for Market Regulation (SAMR). According to JPMorgan Asia equity strategist Mixo Das, Chinese tech stocks are relatively cheap compared to their valuation and future growth in the next 10 years. Shares of tech giants Alibaba Group Holding Limited (NYSE: BABA) and Tencent Holdings Limited (OTC: TCEHY) fell 9% and 1.3%, respectively, due to the regulatory crackdown in Beijing but managed to stay afloat. According to The Wall Street Journal, the two largest Chinese internet companies discuss steps to open up their operations to one another progressively.
Alibaba Group Holding Limited (NYSE: BABA) delivered strong fiscal 2021 results where the company's revenue came in at $109.5 billion, up 41% year-over-year. The company earned a net income of $22.9 billion, or $1.04 diluted earnings per share. In the first quarter of 2021, American billionaire investor Charlie Munger purchased 165,000 shares of Alibaba Group Holding Limited (NYSE: BABA) worth approximately $37 million, making the Chinese e-commerce platform the third-biggest position Munger's Daily Journal Corporation (NASDAQ: DJCO). The shares of Alibaba Group Holding Limited (NYSE: BABA) increased 1.04% in the past month.
Another Chinese stock that is gaining a lot of attention is NIO Inc. (NYSE: NIO). NIO Inc. (NYSE: NIO) was once a penny stock that rose from roughly $1 per share in October 2019 to nearly $70 per share in January 2021. Often referred to as the Chinese Tesla, Inc. (NASDAQ: TSLA), the EV start-up is well-positioned to take a significant portion of the market. NIO Inc. (NYSE: NIO) delivered 21,896 electric vehicles in the second quarter of 2021, a new quarterly high and year-over-year growth of 111.9%. The stock has gained 218% in the last year and is also up 16.3% in the past three months. NIO (NYSE: NIO) was raised from Hold to Buy on July 9th by HSBC analyst Yuqian Ding, who set a price objective of $69 per share.
Twenty years ago, shares of the Chinese gaming giant NetEase, Inc. (NASDAQ: NTES) traded below $1 for about three years post-IPO. Today, the NTES stock trades at $82.93-$134.33 in a 52-week range. NetEase, Inc. (NASDAQ: NTES)'s revenue in the first quarter of 2021 came in at $3.1 billion, up 15% from $2.7 billion in the same quarter in 2020, driven by an increase in revenue from online games services amounting to $2.28 billion. The stock has gained 19.5% in the last twelve months. Shares of NetEase, Inc. (NASDAQ: NTES) also increased 6% in the past three months. On May 19th, UBS analyst maintained a Buy position on NetEase, Inc. (NASDAQ: NTES), with a price target of $139 per share.
There were 248 Chinese companies listed on major US exchanges at the start of the second quarter, with a total market capitalization of $2.1 trillion. Today, we will focus on the cheap Chinese stocks to buy now under $20 that offer long-term returns. The cheap Chinese stocks on our list were chosen based on their hedge fund popularity, analyst recommendations, fundamentals, and growth catalysts.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn't keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey's research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th, 2021, our monthly newsletter's stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points. We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017, and they lost 13% through November 16th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your
Cheap Chinese Stocks to Buy Now
10. CooTek (Cayman) Inc. (NYSE: CTK)
Number of Hedge Fund Holders: 5 Share Price as of July 14th, 2021: $1.65
We start our list of the 10 cheap Chinese stocks to buy now with mobile internet company CooTek (Cayman) Inc. (NYSE: CTK). The Shanghai-based software company created the TouchPal Smart Input mobile keyboard, which had more than 100 million daily and monthly active users in 2017. In 2018, CooTek (Cayman) Inc. (NYSE: CTK) also launched an AI-assisted smartphone keyboard called Talia. Free novel app "Fengdu," game apps like "Farm Hero" and "Puzzle No. 1," and fitness applications like "Happy Jogging" and "Drink Water Reminder" are among the popular mobile apps produced by the Chinese tech firm.
The company has a market cap of more than $103 million. The company's revenue in the first quarter of 2021 came in at $81.6 million and had a gross profit margin of 89.1%. CooTek (Cayman) Inc. (NYSE: CTK) anticipates total net revenue of approximately $83 million in the second quarter of 2021.
As of the end of the first quarter of 2021, 5 hedge funds out of the 866 tracked by Insider Monkey held stakes in CooTek (Cayman) Inc. (NYSE: CTK) worth roughly $2.71 million, up from 2 the preceding quarter worth $226,000.
Just like Alibaba Group Holding Limited (NYSE: BABA), Tencent Holdings Limited (OTC: TCEHY), NIO Inc. (NYSE: NIO), and NetEase, Inc. (NASDAQ: NTES), CooTek (Cayman) Inc. (NYSE: CTK) is one of the best Chinese stocks to buy now.
9. The9 Limited (NASDAQ: NCTY)
Number of Hedge Fund Holders: 5 Share Price as of July 14th, 2021: $10.55
The Limited (NASDAQ: NCTY) ranks 9th on 10 cheap Chinese stocks to buy now. The Shanghai-based internet company was founded in 1995 and was formerly known as GameNow.net Limited. The9 Limited (NASDAQ: NCTY) started as a game developer for mobile phones and TVs. Now the internet company primarily operates as a bitcoin mining firm.
In June, The9 Limited (NASDAQ: NCTY) announced acquiring a Canadian clean-energy crypto mining facility, Montcrypto Ltd., for approximately $6.7 million. This aligns with the company's goal to expand the 20 megawatt supply of electricity in Calgary. In addition, the crypto mining company invested $3.2 million in Skychain Technologies Inc. in April to expand its cryptocurrency mining facility's capacity from 20 MW to 32 MW in Manitoba.
The company has a market cap of $188 million. The company's revenue in the fiscal year 2020 was $95,860, up from $52,749 the previous year. In the fourth quarter of 2020, The9 Limited (NASDAQ: NCTY) recorded a GAAP EPS of $0.37. The stock has gained 46% over the past twelve months, and shares increased 227% year to date. The stock has a PE ratio of 0.94.
At the end of the first quarter of 2021, 5 hedge funds in the database of Insider Monkey held stakes worth $8.85 million in The9 Limited (NASDAQ: NCTY), up from 1 the preceding quarter worth $133,000.
Just like Alibaba Group Holding Limited (NYSE: BABA), Tencent Holdings Limited (OTC: TCEHY), NIO Inc. (NYSE: NIO), and NetEase, Inc. (NASDAQ: NTES), The9 Limited (NASDAQ: NCTY) is one of the best Chinese stocks to buy now.
8. Lufax Holding Ltd (NYSE: LU)
Number of Hedge Fund Holders: 9 Share Price as of July 14th, 2021: $9.27
Lufax Holding Ltd (NYSE: LU) ranks 8th on the list of 10 cheap Chinese stocks to buy now. Shanghai-based Lufax Holding Ltd (NYSE: LU) provides financial services to consumers from small business owners to middle-class investors through its tech-powered wealth management systems. The Chinese fintech firm utilizes AI, data science, and blockchain technology in providing financial services such as retail credit facilitation to its clients.
The company has a market cap of $22.8 billion. On May 14th, JPMorgan analyst Katherine Lei upgraded Lufax from Neutral to Overweight, with a price target of $15, down from $16 previously. JPMorgan analyst is optimistic about Lufax Holding Ltd (NYSE: LU) because its capital would not hinder growth if it increased its balance sheet and risk-taking loans in full accordance with statutory standards. The company's revenue in the first quarter of 2021 came in at $2.33 billion, up 16.9% year-over-year. In the first quarter of 2021, Lufax Holding Ltd (NYSE: LU) had an EPS of $0.30, beating estimates by $0.03.
At the end of the first quarter of 2021, 9 hedge funds in the database of Insider Monkey held stakes worth $208 million in Lufax Holding Ltd (NYSE: LU), down from 11 the preceding quarter worth $209 million.
Just like Alibaba Group Holding Limited (NYSE: BABA), Tencent Holdings Limited (OTC: TCEHY), NIO Inc. (NYSE: NIO), and NetEase, Inc. (NASDAQ: NTES), Lufax Holding Ltd (NYSE: LU) is one of the best Chinese stocks to buy now.
7. Canaan Inc. (NASDAQ: CAN)
Number of Hedge Fund Holders: 9 Share Price as of July 14th, 2021: $6.51
Canaan Inc. (NASDAQ: CAN) ranks 7th on the list of 10 cheap Chinese stocks to buy now. The Hangzhou-based tech firm was founded in 2013 and manufactures semiconductors such as artificial intelligence chips and mining rigs used in bitcoin mining. Canaan Inc. (NASDAQ: CAN) supplies mining hardware to one of the biggest bitcoin mining companies in the world, Genesis Digital Assets. Canaan Inc. (NASDAQ: CAN) signed a long-term agreement with Genesis Digital Assets to deploy AvalonMiner equipment for $93 million, which started in April 2021. In June, Canaan Inc. received a purchase order from the bitcoin mining company for 10,000 of its A1246 and A1166Pro bitcoin mining machines.
The company has a market cap of $1.2 billion. The company's first-quarter revenue grew 490% to $61.5 million, up from $10.5 million in the same period in 2020. The company reported basic and diluted net earnings per American depositary share ("ADS") of RMB0.01 (US$0.00) in the first quarter of 2021. Canaan Inc. (NASDAQ: CAN) stock has gained over 262% over the past twelve months and is up 14% year to date.
At the end of the first quarter of 2021, 9 hedge funds in the database of Insider Monkey held stakes worth $47 million in Canaan Inc. (NASDAQ: CAN), up from 4 the preceding quarter worth $3.8 million.
Just like Alibaba Group Holding Limited (NYSE: BABA), Tencent Holdings Limited (OTC: TCEHY), NIO Inc. (NYSE: NIO), and NetEase, Inc. (NASDAQ: NTES), Canaan Inc. (NASDAQ: CAN) is one of the best Chinese stocks to buy now.
6. LexinFintech Holdings Ltd. (NASDAQ: LX)
Number of Hedge Fund Holders: 11 Share Price as of July 14th, 2021: $9.98
LexinFintech Holdings Ltd. (NASDAQ: LX) ranks 6th on the list of 10 cheap Chinese stocks to buy now. The Shenzhen-based fintech firm offers online consumer financial services such as personal installment loans and installment purchase loans. Since its establishment in 2013, LexinFintech Holdings Ltd. (NASDAQ: LX) has offered more than $68.3 billion in loans to more than 18.3 million customers. In 2020, the fintech company had over 118.1 million registered users and over 27.7 million clients with approved credit lines.
In June, LexinFintech Holdings Ltd. (NASDAQ: LX) inked a collaboration with Chinese telecom giant Huawei to provide a buy-now-pay-later scheme and fintech services to the phone giant's customers in the Chinese market. Huawei Technologies Co., Ltd. is a Shenzhen-based technology company that sells smart devices and ICT infrastructure across 170 countries globally.
The company has a market cap of $1.7 billion. On June 15th, Richard Xu of Morgan Stanley upgraded LexinFintech Holdings Ltd. (NASDAQ: LX) from Equal-weight to Overweight, with a price target of $18 per share, up from the previous $15.30. In the first quarter, the company's gross profit came in at $212 million, up 720% year over year. LexinFintech Holdings Ltd. recorded a net income of approximately $110 million versus a net loss of $105 million in the same period in 2020. In the first quarter of 2021, LexinFintech Holdings Ltd. (NASDAQ: LX) had an EPS of $0.57, beating estimates by $0.30, and has a PE ratio of 6.70. LexinFintech Holdings Ltd. (NASDAQ: LX) stock has gained 40% year to date.
As of the end of the first quarter of 2021, 11 hedge funds out of the 866 tracked by Insider Monkey held stakes in LexinFintech Holdings Ltd. (NASDAQ: LX) worth roughly $28.7, up from 8 the preceding quarter worth $7.6 million.
Just like Alibaba Group Holding Limited (NYSE: BABA), Tencent Holdings Limited (OTC: TCEHY), NIO Inc. (NYSE: NIO), and NetEase, Inc. (NASDAQ: NTES), LexinFintech Holdings Ltd. (NASDAQ: LX) is one of the best Chinese stocks to buy now.
5. MINISO Group Holding Limited (NYSE: MNSO)
Number of Hedge Fund Holders: 12Share Price as of July 14th, 2021: $18.51
MINISO Group Holding Limited (NYSE: MNSO) ranks 5th on the list of 10 cheap Chinese stocks to buy now. The Guangzhou-based lifestyle retail and wholesale company was founded in 2013 and went public in the United States in December 2020, raising $608 million. As of May 2021, MINISO Group Holding Limited (NYSE: MNSO) has 4,587 retail stores worldwide.
The company has a market cap of $5.5 billion. On January 19th, CICC initiated an Outperform rating on MINISO Group Holding Limited (NYSE: MNSO), with a price target of $34.15 per share. The company’s revenue grew 37% to $344 million (2.2 billion RMB), up from $252 million (1.63 billion RMB) in the same period in 2020. In the first quarter of 2021, MINISO Group Holding Limited (NYSE: MNSO) had an EPS of $0.08, beating estimates by $0.02.
At the end of the first quarter of 2021, 12 hedge funds in the database of Insider Monkey held stakes worth $87.6 million in MINISO Group Holding Limited (NYSE: MNSO), down from 18 the preceding quarter worth $210 million.
4. HUYA Inc. (NYSE: HUYA)
Number of Hedge Fund Holders: 13Share Price as of July 14th, 2021: $15.68
HUYA Inc. (NYSE: HUYA) ranks 5th in our list of the 10 cheap Chinese stocks to buy now. Guangzhou-based HUYA Inc. (NYSE: HUYA) is the largest game live streaming platform in China, with 75.5 million monthly active users. Other forms of entertainment, like anime, talent shows, and online theater, can also be broadcast across Asia, Latin America, and the Middle East via the Chinese live stream platform.
The company has a market cap of $3.6 billion. On April 23rd, 86 Research upgraded HUYA Inc. (NYSE: HUYA) to a Buy, with a price target of $22 per share. The company’s revenue was $397.6 million, up 8% year over year from $370 million, and it has a gross profit margin of 6.2%, up from 5.5% in the last year. In the May quarter, the company recorded earnings per share of $0.17, beating market predictions by $0.04. HUYA Inc. (NYSE: HUYA) stock has a forward PE ratio of 32.89.
At the end of the first quarter of 2021, 13 hedge funds in the database of Insider Monkey held stakes worth $336 million in HUYA Inc. (NYSE: HUYA), up from 12 the preceding quarter worth $342 million. Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm ARK Investment Management is a leading shareholder in HUYA Inc. (NYSE: HUYA) with 10.9 million shares worth more than $214 million.
3. Momo Inc. (NASDAQ: MOMO)
Number of Hedge Fund Holders: 25 Share Price as of July 14th: $13.60
Momo Inc. (NASDAQ: MOMO) ranks 3rd on the list of 10 cheap Chinese stocks to buy now. The Beijing-based social media platform is making a storm in the Chinese market by providing a short-video and live-video platform for 115.3 million monthly active users (MAUs). Momo Inc. (NASDAQ: MOMO) also operates Tantan, a dating app with over 3.5 million paying MAUs. The Chinese internet company was founded in 2011 and was formerly known as Momo Technology Company Limited.
The company has a market cap of $2.8 billion. On March 26th, Momo Inc. (NASDAQ: MOMO) was raised by Citigroup analyst Hillman Chan from Neutral to Buy, with a price target of $19.30, up from the previous $16.10. The company’s first-quarter revenue came in at $529.7 million. In the first quarter of 2021, Momo Inc. (NASDAQ: MOMO) had an EPS of $0.45, beating estimates by $0.09.
At the end of the first quarter of 2021, 25 hedge funds in the database of Insider Monkey held stakes worth $342.4 million in Momo Inc. (NASDAQ: MOMO), up from 24 the preceding quarter worth $342.2 million.
2. 21Vianet Group, Inc. (NASDAQ: VNET)
Number of Hedge Fund Holders: 30 Share Price as of July 14th, 2021: $19.45
21Vianet Group, Inc. (NASDAQ: VNET) ranks 2nd on the list of 10 cheap Chinese stocks to buy now. Beijing-based 21Vianet Group, Inc. provides hosting services, VPN, and hybrid IT services to small and medium enterprises and the government in China. In 2014, Microsoft Corporation (NASDAQ: MSFT) expanded its cloud services and office applications in China via 21Vianet Group, Inc. (NASDAQ: VNET).
The company has a market cap of $2.84 billion. In the first quarter of 2021, 21Vianet Group, Inc. (NASDAQ: VNET) had an EPS of -$0.12, versus consensus earnings estimates of -$0.7. Currently, there are 10 analysts that rated 21Vianet Group, Inc. (NASDAQ: VNET) a Buy, with an average price target of $247.82.
At the end of the first quarter of 2021, 30 hedge funds in the database of Insider Monkey held stakes worth $581 million in 21Vianet Group, Inc. (NASDAQ: VNET), down from 33 the preceding quarter worth $731 million.
1. iQIYI, Inc. (NASDAQ: IQ)
Number of Hedge Fund Holders: 40Share Price as of July 14th, 2021: $12.55
Topping the list of the 10 cheap Chinese stocks to buy now is iQIYI, Inc. (NASDAQ: IQ). The Beijing-based internet company offers various entertainment products and services like social media and e-commerce platforms, online games, animation, and live broadcasting. The company was founded in 2009 and was formerly known as Qiyi.com, Inc.
The company has a market cap of $10.4 billion. On May 19th, CLSA upgraded iQIYI, Inc. (NASDAQ: IQ) to an Outperform rating, with a price target of $16 per share. Meanwhile, iQIYI, Inc. (NASDAQ: IQ) was upgraded from Mixed to Positive by OTR Global on July 7th. The company’s first-quarter revenue grew 4% to $1.2 billion year over year. The internet company anticipates total net revenues of $1.10 billion to $1.17 billion for the second quarter. In the first quarter of 2021, iQIYI, Inc. (NASDAQ: IQ) had an EPS of -0.25, beating estimates by $0.11.
Out of the hedge funds being tracked by Insider Monkey, Beijing-based investment firm Hillhouse Capital Management is a leading shareholder in iQIYI, Inc. (NASDAQ: IQ), with more than 38 million shares worth more than $642 million. At the end of the first quarter of 2021, 40 hedge funds in the database of Insider Monkey held stakes worth $1.36 billion in iQIYI, Inc. (NASDAQ: IQ), up from 30 the preceding quarter worth $1.05 billion.
