Chinese consumer stocks that have been experiencing growth in international revenue are outperforming the market despite a dismal year for most Chinese stocks. One notable example is U.S.-listed company Miniso, which has seen a more than 140% increase in its stock price this year. Jefferies analysts predict that Miniso will report another strong quarter in 1QFY24, with sales growth of about 39-40% in both China and overseas markets. The company operates a network of brick-and-mortar stores that sell low-cost home goods and toys, often co-branded with popular icons like Barbie. Miniso is expected to release its earnings at the end of November, and Jefferies analysts have given the stock a buy rating with a raised price target of $29.30 per share.
In the consumer electronics sector, Hong Kong-based Xiaomi has been successful in selling its products outside of the domestic market. According to Morgan Stanley analysts, Xiaomi’s global smartphone shipments in the third quarter are projected to grow by 20-29% from the previous quarter, showing recovery from the same period last year. Despite a more than 10% decline in the broader Hong Kong stock market, Xiaomi’s shares have risen by over 20% this year. The company also sells televisions, home appliances, and wearables. The Morgan Stanley report expects Xiaomi to have a strong third quarter, supported by good shipment momentum and resilient margins. Analysts recommend overweighting Xiaomi shares and have set a price target of HKD 15, representing an 11% increase from the previous closing price.
Another Chinese brand gaining global smartphone market share, particularly in emerging markets, is Transsion. Shanghai-listed Transsion has a 9% share in the global market, putting it in competition with Oppo for the fourth-place position. Canalys, a market research company, suggests that these short-term wins could lead to long-term success for Xiaomi and Transsion. Although not covered in the Morgan Stanley report, shares of Transsion have risen by nearly 70% this year. The smartphone manufacturer is based in Shenzhen and primarily sells to customers in Africa, India, and other emerging markets.
Pinduoduo, a U.S.-listed company, has also been a solid performer this year, with an increase of over 30% in its stock price. The company’s parent, Temu, operates an overseas e-commerce business, but precise details of its performance are kept secret. Andre Chang, a J.P. Morgan China Internet analyst, estimates that Temu will generate a gross merchandise volume of 70 billion yuan ($957 million) this year, which is expected to more than double next year. Chang believes that Temu can increase prices to 40-60% of Amazon’s comparable products, which would make the business profitable. He anticipates that Pinduoduo will turn profitable in 2025 and has set a price target of $120, representing a 9% increase from the previous closing price. Chang also expects Pinduoduo’s core China revenue to outgrow its competitors, Alibaba and JD.com, making it the “best growth play” in China’s e-commerce industry.
Overall, these Chinese consumer brands with growing international revenue have outperformed the market this year and are predicted to continue climbing. Investors and analysts have high expectations for Miniso, Xiaomi, Transsion, and Pinduoduo, as they capitalize on various market opportunities.
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