With the relaxation of pandemic restrictions in China, mobility and activity are expected to increase this year, boosting the global economy. So, investors could look to buy discounted and fundamentally strong China stocks FinVolution Group (FINV), LexinFintech Holdings Ltd. (LX), and Tarena International, Inc. (TEDU).
The main development has been the reopening of China, where surging consumption is boosting growth across the region despite weaker demand from the rest of the world. KPMG China’s economists have forecast 5.7% GDP growth for 2023.
The Chinese economy grew by 4.5% in the first quarter, topping expectations. “From what we see this year, China’s economy shows a clear momentum of rebound and improvement,” Chinese Premier Li Qiang said. Moreover, Li believes his country is still on track to reach its annual growth target of around 5%.
Given these factors, investors could consider the featured stocks. Let’s take a closer look at their fundamentals.
FinVolution Group (FINV)
Headquartered in Shanghai, the People’s Republic of China, FINV operates in the online consumer finance industry. The company operates a fintech platform that is empowered by proprietary technologies connects underserved borrowers with financial institutions.
In terms of forward non-GAAP P/E, FINV’s 3.67x is 58% lower than the 8.74x industry average. Its 0.49x forward EV/EBITDA is 95.5% lower than the 10.72x industry average. Likewise, its 0.11x forward EV/Sales is 96.4% lower than the 2.99x industry average.
On June 15, 2023, FINV, a leading fintech platform, announced that its Indonesian financial application, AdaKami, signed a strategic cooperation agreement with Bank OCBC NISP. FINV’s President and CEO, Mr. Tiezheng Li, commented, “The strategic partnership with Bank OCBC NISP further expands our funding base in the international markets and reinforces our successful transition to better-quality borrowers.”
He further stated that the company is well-positioned through extensive global partnerships to strengthen its international foothold and capture the enormous opportunities in the fintech space in Southeast Asia.
FINV’s non-GAAP net profit for the fiscal first quarter ended March 31, 2023, increased 28.1% year-over-year to RMB710.18 million ($97.99 million). Its non-GAAP operating profit increased 26.7% year-over-year to RMB762.64 million ($105.24 million).
In addition, its non-GAAP EPS attributable to FINV’s ordinary shareholders came in at RMB0.50, representing a 31.6% increase over the prior-year quarter.
FINV’s EPS and revenue for fiscal 2023 are expected to increase 6.1% and 13.4% year-over-year to $1.25 and $1.84 billion, respectively. Over the past one month, the stock has gained 12.4% to close the last trading session at $4.61.
FINV’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the China category, it is ranked #1 out of 45 stocks. It has an A grade for Value and a B for Stability, Sentiment, and Quality. To see the additional ratings of FINV for Growth and Momentum, click here.
LexinFintech Holdings Ltd. (LX)
Headquartered in Shenzhen, the People’s Republic of China, LX provides online consumer finance services. The company operates Fenqile.com, Le Hua Card, and Maiya application.
In terms of forward non-GAAP P/E, LX’s 1.90x is 78.3% lower than the 8.74x industry average. Its 0.86x forward EV/Sales is 71.2% lower than the 2.99x industry average. Likewise, its 4.91x forward EV/EBITDA is 54.3% lower than the 10.72x industry average.
LX’s total revenues for the fiscal first quarter ended March 31, 2023, increased 74.2% year-over-year to RMB2.98 billion ($411.62 million). Its adjusted net income attributable to ordinary shareholders of the Company increased 190.2% year-over-year to RMB375.06 ($51.76 million).
Its adjusted net EPS attributable to ordinary shareholders of the Company came in at RMB1.00, representing a 222.6% increase over the prior-year quarter.
LX’s EPS and revenue for fiscal 2023 are expected to increase 53.4% and 21.7% year-over-year to $1.21 and $1.75 billion, respectively. Over the past nine months, the stock has gained 39.4% to close the last trading session at $2.37.
LX’s POWR Ratings reflect its solid prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. It is ranked #2 in the same industry.
The stock has an A grade for Value, and Sentiment and a B for Growth and Quality. For additional ratings of LX for Momentum and Stability, click here.
Tarena International, Inc. (TEDU)
TEDU is headquartered in Beijing, the People’s Republic of China. It operates through two segments: IT Professional Education; and IT-focused Supplementary STEAM Education Services. In addition, the company operates TMOOC.cn, an online learning platform for education courses and job placement training courses.
In terms of trailing-12-month EV/Sales, TEDU’s 0.08x is 93.5% lower than the 1.18x industry average. Likewise, its 0.08x trailing-12-month Price/Sales is 90.7% lower than the 0.87x industry average.
TEDU’s net revenues came in at RMB385.10 million ($53.14 million) for the first quarter that ended March 31, 2023. The company’s gross profit came in at RMB201.00 million ($27.74 million).
Over the past month, the stock has fallen 16.6% to close the last trading session at $2.61.
The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. It is ranked first in the China category. The stock has an A grade for Growth and a B for Value and Quality. Click here to see the additional ratings of TEDU for Momentum, Stability, and Sentiment.
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FINV shares were trading at $4.61 per share on Tuesday morning, up $0.01 (+0.22%). Year-to-date, FINV has declined -2.31%, versus a 16.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.
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