China equities 2023 Q3 preview: Investment opportunities and key updates - Charts of the Week
Catch up with China equities in 13 charts
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This edition of "Charts of the Week" offers an overview of important events involving major players in various industries, using BigOne Lab's proprietary data. We have selected the top companies you should pay attention to from the 4,000+ publicly listed companies we track.
Week of Oct 30, 2023
Recent data suggests a positive trajectory for China's economy. The Q3 GDP growth rate of 4.9% exceeded market expectations, indicating a robust recovery. A series of government-initiated stimulus measures and policies have been introduced, and the "Gold Week" contributed to an improvement in consumer sentiment. Specifically, there was a rise in discretionary spending, with a focus on health products.
Despite positive economic indicators, market sentiments remain low. China's equities have consistently performed poorly in the global market this year.
Continued policy support is expected - The Ministry of Finance announced on October 24th that it will approve the issuance of 1 trillion yuan in special bonds in the fourth quarter of 2023, and raise the national deficit from 3% to 3.8%. This unexpected move by the government highlights the determination to stabilize economic growth, with indications of a potential expansionary policy in 2024.
Considering the positive macroeconomic indicators and expected policy support, it would be wise to reassess Chinese equities, particularly if there is a positive change in capital market sentiments. In the following sections, we will provide important data points regarding selected Chinese equities in anticipation of Q3 earnings. These insights are intended to provide investors with relevant information to aid in making informed decisions.
Covered in this issue:
Crucial industry trends to watch in China, including the consumer, real estate, internet, and EV maker sectors.
Key data points and forecasts on China equities ahead of the 2023 Q3 earnings, including:
China e-commerce: growth of online sales and hiring trends of BABA, JD, Pinduoduo, Douyin, Miniso, and Kuaishou
Meituan: growth of on-demand delivery orders
Boss Zhipin: overall job posting growth and estimated growth in job postings by paying companies
Real estate: latest tracked gross transaction value of existing and new home sales
Gauge management confidence of China's EV makers: hiring trends of NIO, Xpeng, Li Auto, Tesla, and BYD Auto
Coffee Wars: latest Meituan orders update for Luckin, Cotti coffee, and Starbucks
High-growth consumer sectors: online sales growth of leaders in the sports & health category (Anta, Li Ning, Lululemon) and the personal care & makeup category (Proya, L'oreal, Giant Biogene, Shiseido)
Sports & Health
Online sales indicate a continued recovery, particularly in discretionary spending within the personal care & makeup and sports & health sectors, as seen in both gross merchandise value (GMV) and average selling price (ASP).
In the Sports and Health category, sportswear giants Anta (HK:2020), Nike (NYSE: NKE), and Lululemon (NASDAQ: LULU) achieved above-industry growth in Q3 on major e-commerce platforms like Tmall, JD, and Douyin.
Personal Care & Makeup
Due to the release of treated radioactive water in Fukushima, Japanese skincare companies like Shiseido saw a decrease in online sales in September, resulting in a negative impact on their overall sales in Q3.
The domestic rising star Proya Cosmetics (SHA: 603605) continues to show strong year-on-year growth in online sales in Q3, while Bloomage Bio Technology (SHA: 688363) continues to experience a decline.
China e-commerce: BABA, JD, Pinduoduo, Kuaishou, Douyin, Miniso
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