Due to economy lock down and social isolation, people shift their economy activity from offline to online, new economy stocks are expected to be fully benefit from the global lock down. Over the past few months, all new economy stocks had broken their record high. As 2020 first half earning season come to an end, it’s time to find out which Hong Kong listed China new economy stock is the best performer.
ZTE Corporation is a leading provider of integrated communication and information solutions in the world market. It’s business segments including carriers’ network , government and corporate business consumer business. 67.27% of the operating revenue was from China. According to 2020 interim report, ZTE ‘s half year revenue was RMB 47,199 million which increased 5.81% yoy. Earning per share was RMB 0.4 which increased 14.29% yoy.
5G is one of the most important technology for next decade and it still under development worldwide . As a leading global provider with 73.24% gear ratio, ZTE ‘s future revenue growth may skyrocket if it able to capture this 5G opportunity.
Alibaba Group (09988)
Alibaba Group is a global e-commence giant. It’s business segments including core commerce, cloud computing, digital media and entertainment. In the quarter ended June 30, 2020, revenue was RMB 153,751 million which increased 34% yoy. Non-GAAP diluted earnings per share was RMB 2.17 which increased 18% yoy.
According to the quarter report, 66% revenue was from China commerce retail. Alibaba will be benefit as China ‘s economy starts resume to normal. In future, international commerce wholesale, Cainiao logistics services and Cloud computing may become the main growth catalyst for Alibaba. The revenue from international commerce wholesale, Cainiao logistics services and Cloud computing increased by 43%, 54% and 59% respectively.
Tencent Holdings Limited (00700)
Tencent Holdings Limited is a China leading technology conglomerate. It’s business segments including communication and social, online games, digital content , online advertising, fintech and clouding business. According to 2020 interim report, revenue was RMB 222,948 million which increased by 28% yoy. Earning per share was RMB 6.541 which increased by 21% yoy.
Tencent ‘s online game and social networks segment is expected to benefit from economy lock down and social isolation. According to 2020 interim report, online game and social networks segments increase by 35.4% and 25.7% yoy. Online game segment is still the main source of income for Tencent, which account for 33.9% of revenue.
JD.com is a leading e-commence company in China. It’s business segments including JD Retail, JD Health and JD Logistics. According to 2020 interim report, net revenues was RMB 331,060 million which increased by 28% yoy. Non-GAAP diluted earning per share was RMB 2.77 which increased by 21.4%.
The result of JD.com was in line with its main competitor Alibaba Group. Same as Alibaba Group, JD.com will benefit as China’s economy resume to normal. Beside the core e-commerce business, new businesses segment such as healthcare and logistics will be the growth catalyst for future. New businesses segment growth by 50% yoy and account for 4.6% revenue of 2020 first half.
Xiaomi Corporation (01810)
Xiaomi Corporation is the leading Smartphone manufacturer in China. It’s business segments including smartphone, IoT and lifestyle product, Internet service. According to 2020 interim report, revenue was RMB 103,240 million which increased 7.9% yoy. Earning per share was RMB 0.279 which increased by 30% yoy.
Xiaomi corporation seems to be the beneficiary for US sanction over Huwei. According to Canalys, in the second quarter of 2020, Xiaomi market shares in terms of smartphone shipments ranked among the top five in 50 countries and regions and reached the top three in 25 of these markets. Smartphone shipments grew by 64.9%, 99.4%, 66.3% and 113.0% yoy in Europe, Latin America, the Middle East and Africa respectively. In future, international market still be the main focus for Xiaomi.
NetEase is a leading internet technology company based in China. It’s business segments including online games, Youdao (online education service), innovative businesses ( live video streaming and music streaming). According to 2020 interim report, net revenues were RMB 35,247 million which increased by 22% yoy. Diluted net income per share was RMB 2.47 which increased by 47% yoy.
NetEase seems to be able to capture the opportunity from economy lock down and social isolation. All business segments have a remarkable growth yoy. Revenue from online game services, Youdao and Innovative businesses increased by 17.4%, 112% and 33.6%. As more people shift their economy activities from offline to online, the online education service will be one of the key sector for future growth.
Meituan-Dianping is a Chinese leading technology company which provide entertainment, dining, delivery and travel services. Its business segment including food delivery, hotel & travel and new initiatives. According to 2020 interim report, revenues was RMB 41,475 million which decreased by 1% yoy. Diluted net income per share change from RMB -0.1 in 2019 to RMB 0.11 in 2020.
During economy lock down, Meituan-Dianping is fully benefit from the shifting of online behavior. In the second quarter, food delivery and new initiatives increased by 13.2% and 22.1% yoy. However, hotel & travel segment was decreased by 13.4% yoy. Overall, Meituan-Dianping still able to deliver a profitable interim result.
China new economy stocks have a remarkable growth during economy lock down. As vaccine is still under development, online activities are expected to continuous for a period of time. As expected, revenue growth for new economy stock will continuous in the second half of 2020.