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Possible the two best Chinese stocks to buy in 2024

by Thea Coates Finance Reporter
11th Apr 24 10:45 am

The Chinese economy faced some of the most economic repercussions from COVID-19, which still affect it today.

Even after releasing significant regulations and restrictions, China still saw a slow 2023, and many have begun to worry about the superpower’s economic performance in 2024.

  • The Chinese economy is facing slowdowns, taking its toll on many Chinese stocks, but not all of them.
  • NetEase is a leading publisher in the incredibly profitable game industry and has excellent prospects this year.
  • PDD Holdings operates one of the largest e-commerce platforms worldwide and has shown incredible growth already this year.

For investors, these economic ripples have shown their effect on Chinese stocks, which had slower growth and struggled to find their footing last year. While many stocks face challenges, some still rise above and outperform peers. Financial Analyst at Trading.Biz Joel Lim has identified the two most impressive Chinese stocks to get your hands on this year.

NetEase and PDD Holdings are showing great growth and stunning performances despite significant slowdowns in the Chinese economy. Investors should have these Chinese stocks at the top of their buy lists.

NetEase (NTES)

NetEase is a major tech company and China’s top video game creator and publisher. While games are the company’s primary revenue source, it also hosts an online education and music streaming platform. Compared to its peers, diverse income streams are one of NetEase’s significant advantages.

While revenue growth has stunted in the last few years along with the larger economy of China, NetEase continues to grow, showing a 5.4% revenue growth in the most recent quarter. In addition to macroeconomic challenges, NetEase also faced a rise in regulations for video game releases by the Chinese government.

Still, NetEase continues to persevere with consistent income from games, growing 9.6% in Q4 2023 and a 27% increase in gross profit. Joel Lim notes, “NetEase has proven its superiority in games but has also seen promising growth with its education platform, Youdao, which has grown by almost 2% despite strict regulations on for-profit programs.”

NetEase is expected to show continuous growth and only continue growing, clearing away the regulations and economic conditions that hold it back.

PDD Holdings (PDD)

PDD Holdings owns the worldwide e-commerce giant Temu and has seen magnificent growth recently following an extremely impressive Q4 report. Q4 revenue showed a 123% increase from the previous year and a shocking 108% boost in adjusted earnings per share.

What makes these numbers so incredible is their relative strength compared to PDD’s largest competitors, JD and Alibaba, who struggled towards the end of last year. Temu offers unbeatable prices almost everywhere in the world, making it possible for PDD to overcome lower consumer spending in China.

Joel Lim mentions, “While PDD has seen explosive growth following its Q4 showing, it still sits at a low forward p/e ratio of just under 14, and considering its exponential performance, there is no better time to buy.”

The chart below shows PDD is on a dip, but that won’t last long, and investors should take advantage of this price while they still can.

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