3 Compelling Chinese Stocks to Buy for Multibagger Returns

Economic Overview - The last few years have been challenging for Chinese stocks due to regulatory headwinds, geopolitical tensions, and decelerating GDP growth, but the worst appears to be over for the economy [1] - China's GDP growth for the March quarter exceeded expectations, and expansionary policies are expected to continue, supporting growth [1] - The global trend towards lower interest rates is likely to benefit the Chinese corporate sector [1] Li Auto (LI) - Li Auto is highlighted as a leading emerging EV company in China, with a year-to-date stock correction of 49%, presenting a buying opportunity [2] - In May, Li Auto reported a year-on-year delivery growth of 23.8%, totaling 35,020 cars, supported by a focus on the domestic market and new model launches [2] - The company expanded its retail presence from 474 stores in March to 487 stores in May, which is expected to further support delivery growth [2] - Li Auto ended Q1 2024 with a cash buffer of $13.7 billion, providing flexibility for product innovation and potential international expansion [2][3] Miniso Group (MNSO) - Miniso Group is another attractive Chinese growth stock, trading at a forward P/E of 17.3, with ambitious global growth plans expected to drive revenue and EBITDA growth [5] - For Q1 2024, Miniso reported a year-on-year revenue growth of 26% to $515.7 million, with adjusted EBITDA increasing by 36.7% and EBITDA margin rising to 25.9% [5] - The company had a total of 6,630 stores at the end of the quarter, an increase of 1,116 stores year-on-year, with plans to add 900 to 1,100 stores annually through 2028 [5] - Miniso offers a dividend yield of 1.9%, with expectations for healthy dividend growth over the next five years [6] JD.com (JD) - JD.com has seen a 15% increase in stock price over the last six months, trading at a forward P/E of 8.9, with expectations for continued positive momentum [7] - The Chinese government cut interest rates in February to stimulate the housing sector, which is anticipated to benefit JD.com in the next 12 to 24 months [7] - JD Retail generated an operating profit of 9.3 billion renminbi in Q1 2024, while JD Logistics achieved operating level profitability with a year-on-year revenue growth of 15% [7] - JD.com is exploring new business incubations that could create long-term value, with potential for business de-merger to unlock significant value [8]