China’s investors need to ‘look beyond the obvious’

30 June 2020

China’s investors, who aim to identify recovery stocks which are paying dividends, should take a closer look “beyond the obvious” companies as there will be winners and losers, according to Premium China Funds Management (PCFM). 

The firm’s director and head of distribution and operations, Jonathan Wu, said that while the recovery of Chinese companies from the coronavirus closedowns and limitations had been generally impressive, it had already become clear that some companies were doing better than others. 

“Some of the fastest-recovering companies are not what you would instinctively expect them to be,” he said. 

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According to him, one such company was Meituan Dianping, a group buying website for locally found delivery and retail services as well consumer products. 

 “For us, Meituan has represented a solid investment because it has weathered COVID-19 better than many other Chinese companies and is on a robust recovery trajectory. It is always satisfying when a company outperforms analyst predictions,” Wu said. 

Meituan also offered positive return on growth, something which according to Wu, looked achievable on the basis of structural changes made by the company including its significant investment in e-bikes. 

“Given the manner in which Meituan managed the challenges thrown up by the coronavirus, our research confirms that it has solid prospects moving beyond 2020,” We said. 

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