Who hasn’t given some thought to how to invest in China’s remarkable economic growth? Forbes China magazine’s 2010 Investment Guide hit the streets today, and offers 10 domestically traded stocks that the magazine’s editors consider to be worth buying. Even if you can’t buy domestically traded stocks in the mainland, the group offers a good window into industries and businesses that are doing well in the world’s most dynamic economy.
Here are this year’s picks, with their China-exchange ticker number in parentheses:
*Suning Appliance (002024), China’s largest retail appliance chain. A messy battle for control of rival Gome Electrical Appliances and government encouragement of retail spending by Chinese can only be great news for Suning and its
suppliers. Among U.S. companies that sell products in Suning’s stores are Dell, Hewlett-Packard, IBM and Apple Computer.
*Jiangsu Yanghe Brewery (002304), China’s no. 4 manufacturer of rice wine. Some 70% of its sales are concentrated in Jiangsu province, leaving a lot of room to grow in other areas.
*Shanghai Pret Composites (002324), a maker of auto parts made from plastics. Growth prospects are good because of rising auto sales in China and good demand for parts made from advanced materials.
*Shenzhen Hepalink (002339), a supplier of heparin pharmaceuticals. Shares are trading at a nose bleeding price-earnings ratio of 55, according to Bloomberg, but the growth prospects are good for U.S. exports.
*China Animal Husbandry (600195), a producer of animal feed and vaccine products. The company has a full line of animal vaccines at a time when meat consumption in China is rising and consumers are more concerned about meat quality.
*Jiangsu Hengrui Medicine (600276), one of China’s largest pharmaceutical companies. Demand is strong for a product line that includes antibiotics, anesthetics and angiomyocardiac drugs. Hengrui is also expanding production capacity.
*Fujian Longking (600388), a maker of environment protection-related equipment. The company is poised to win more orders as governments and business spend money on pollution control.
*Zhuzhou Times New Material Technology (600458), a maker of polymers products, anti-vibration products and paints. The company has been winning orders from companies involved in the wind energy and highway construction business.
*Jiangsu Changjiang Electronics Technology (600584), one of China’s largest home-grown semiconductor makers. Changjiang is poised to benefit from growth in improving profits and healthy demand.
*Ping An Insurance Group (601318), one of China’s big three insurance companies, along with China Life Insurance and China Pacific Insurance. Ping An’s shares also trade in Hong Kong. The company is 16% owned by U.S.-listed HSBC.
Before jumping on any of this year’s picks, you’re probably thinking: “How well did Forbes China’s stock picks do last year?”
Not bad. During a 12-month stretch when the main indices of the Shanghai and Shenzhen Stock Exchanges lost 20.3% and 20.8% respectively, six of Forbes China’s 10 picks outperformed: Sanan Optoelectronics soared 165%, Yunnan Baiyao rose 84%, Henan Rebecca Hair Products gained 34%, Luzhou Laojiao slid 2.5%, China CSSC Holdings declined 13% and China Zoomlion Heavy Industry lost 20.1%.
