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2021 proved to be a rollercoaster ride for global markets, but this year could present an opportunity for many beaten-up Asian stocks. Here are nine companies to keep an eye based on their forward earnings growth.
Please remember that past performance is not a reliable indicator of future results. Financial data is correct as of February 2022 and accessed via Yahoo Finance.
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The technology giant, best known for its e-commerce business, has faced plenty of scrutiny in 2021, along with the group’s founder Jack Ma. But 2022 may see room for growth in the cloud business as the company looks to challenge the dominance of Amazon Web Services and Microsoft Azure. Plans are also in place to open its first data centres in South Korea and Thailand. The cloud is regarded by some investors as a potentially significant profit driver for Alibaba’s future bottom line, with the segment having turned profitable in the quarter ending December 2020.
Trailing P/E: 19.96
Forward P/E: 18.83
The Chinese electric vehicle (EV) and battery manufacturer is ramping up sales of its cars. It shifted 426,972 units in 2020 and analysts at Jefferies are expecting the company to sell 988,700 units in 2022. BYD also has plans to increase its battery production capacity next year and is tipped to supply batteries to third parties, including Tesla, if rumours reported by Electrive are to be believed. The EV maker is backed by Warren Buffet’s Berkshire Hathaway.
Trailing P/E: 217.44
Forward P/E: 100
Amid a global chip crunch, the Taiwanese semiconductor giant TSMC has seen its revenue grow thanks to demand for chips for high-performance computing as well as automotive manufacturing. In mid-2021, the company, whose customers include Qualcomm and Apple, unveiled a plan to spend $100bn over the next three years in order to increase its production capacity at its plants. This could also help to consolidate its position as the world’s leading chip foundry.
Trailing P/E: 30.23
Forward P/E: 25.32
Demand for solar energy is growing, especially among homeowners. This may benefit upstream stakeholders in the renewable energy supply chain, such as JinkoSolar, the world's biggest solar panel maker. The US is its most lucrative region and accounts for around a third of total revenue, which does put the company at risk if tension between the US and China were to affect solar imports. In good news, however, US trade officials have rejected a request from domestic manufacturers to impose a tariff on Asian companies exporting solar panels to the US.
Trailing P/E: N/A
Forward P/E: 13.24
The Chinese government has been attempting to control the country’s swelling real estate market by regulating house prices, but KE Holdings, or Beike Zhaofang as it’s better known, remains committed to its goal of “admirable service, joyful living”. Beyond operating as an estate agency, the company also focuses on home renovation. To strengthen its position in this segment, it has agreed to acquire full-home renovation service company Shengdu Home Renovation for no more than $1.2bn – the deal is expected to close by June 2022, as reported by Yicai Global.
Trailing P/E: 63.73
Forward P/E: 38.31
The recovery of Macau’s gambling industry has stalled due to further outbreaks of COVID-19 in the region, and attendant restrictions. That said, and despite a significant loss sequentially in the three months to the end of September 2021, the company still managed to report a positive adjusted EBITDA thanks to the performance of the world’s second largest casino, The Venetian Macao. The company is expecting travel and tourism spending to rise once restrictions have been lifted, especially those imposed on its border with mainland China.
Trailing P/E: N/A
Forward P/E: 21.05
NetEase has been one of a number of companies hit by China banning children from playing video games for more than three hours a week. The material impact should be minimal, though, and NetEase has said that minors only account for circa 1% of total revenue. Looking to 2022 and beyond, analysts predict that gaming sales will continue to boom. The company has a respectable return-on-equity ratio compared to the industry average.
Trailing P/E: 39.30
Forward P/E: 23.47
Chinese education stocks have performed poorly in 2021 due to a government crackdown on companies offering after-school tuition. To toe the line and continue tutoring, companies will have to apply for a licence. New Oriental has decided that the way to stay in Beijing’s good books is to embrace President Xi Jinping’s strategy of ‘common prosperity’ – it will close 1,500 training centres and donate around 80,000 desks and chairs to rural public schools. While its education business will not shut completely, New Oriental is pivoting into the agricultural sector and will set up an e-commerce platform through which farmers will be able to sell produce.
Trailing P/E: 10.85
Forward P/E: 5.17
Back in 2019, Trip.com announced its goal of becoming the number one travel brand in Asia in 2022 and the leading global brand by 2025. While COVID-19, lockdowns and border closures may have gotten in the way, a recovery in China’s domestic market momentum has pushed revenue higher in the second half of 2021. Trip.com plans to be “adaptive and responsive to the changing market conditions and the evolving demands of post-pandemic travellers.”
Trailing P/E: 32.71
Forward P/E: 31.15
The iShares Asia 50 ETF [AIA] offers exposure to 50 large established companies across the electronics, e-commerce, industrial and finance industries.
The SPDR S&P Emerging Asia Pacific ETF [GMF] holds some of the more notable names from the region – Alibaba, Tencent, and JD.com – as well as Indian IT giant Infosys.
The SmartETFs Asia Pacific Dividend Builder ETF [ADIV] focuses on high-quality dividend growth, rather than high yield. Holdings include TSMC, Singaporean banking group DBS and Japan’s largest insurance company, Aflac.
FAQs
According to CNBC’s calculations, Asian stock markets were some of the best performers globally in the first half of 2021. Here are the gains made by various indices: VN-Index; Vietnam 27.6%, Taiex, Taiwan 20.5%; Kospi, South Korea 14.7%. For comparison, the S&P 500 rose 14.4% in the first half of the year and Europe’s Stoxx 600 gained 13.5%.
Like all global markets, Asian stocks face inflationary pressures, while there’s ongoing regulatory risk surrounding China's big tech. Share prices of Chinese companies are also at the mercy of tensions with the US. This is perhaps best illustrated by the SZSE Component index, which focuses on 500 stocks trading on the Shenzhen Stock Exchange, gaining just 4.78% in the first six months of 2021. Read our guide to China tech stocks.
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