Investor Place·2024-08-02 13:00Core Viewpoint - Chinese stocks are currently undervalued due to prolonged market depression caused by macroeconomic, regulatory, and geopolitical factors, presenting a buying opportunity for quality stocks [1] Market Overview - The Chinese market is seen as attractive for equity exposure amid stretched valuations in other markets, with expected expansion policies supporting growth and earnings improvement [1] - Chinese leaders are shifting stimulus focus towards consumers, likely leading to GDP growth acceleration [2] Company Analysis: Li Auto (LI) - Li Auto has experienced a nearly 50% correction year-to-date, trading at a forward P/E of 17.8, indicating undervaluation [3] - The company has a strong balance sheet with a cash buffer of $13.7 billion as of Q1 2024, and is focused on expansion in China, unaffected by EU tariffs [3] - Li Auto is investing in technology, aiming to launch level 3 self-driving cars by 2025, making it a compelling buying opportunity [4] Company Analysis: Miniso Group (MNSO) - Miniso has seen a 17% correction year-to-date, trading at a forward P/E of 13.4 and offering a dividend yield of 2.57% [6] - The company reported a 26% year-over-year revenue growth to $515.7 million in Q1 2024, with an adjusted EBITDA margin increase of 200 basis points to 25.9% [6] - Miniso plans to open 900 to 1,100 new stores annually through 2028, targeting a revenue growth CAGR of 20%, indicating strong future growth potential [7] Company Analysis: Yum China (YUMC) - Yum China has corrected by 50% over the last 12 months, trading at a forward P/E of 14 and offering a dividend yield of 2.13% [8] - The company operates 15,022 stores as of Q1 2024, with plans to expand to 20,000 stores by 2026, supporting top-line growth [8] - Yum China is targeting double-digit earnings per share growth from 2024 to 2026, with a robust $1.5 billion return to shareholders planned for 2024 through dividends and share repurchases [9]