The Chinese economy is having a tough time recouping from the effects of the COVID-19 pandemic. However, specific stocks from the mainland are performing exceptionally well, and analysts see a solid upside potential for them going forward. NetEase (HK:9999) and BYD Co. (HK:1211) are two such “Strong Buy” stocks that have earned favorable analysts’ reviews and are on track for massive share price appreciation. What’s more, both stocks have earned a “Perfect 10” on the TipRanks Smart Score system, implying that they are highly likely to outperform market expectations.
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You can use the TipRanks Database to filter stocks with a “Strong Buy” rating and study them further with the help of TipRanks tools. Let’s delve deeper into these two Hong Kong-listed stocks to understand analysts’ bullish stance.
NetEase (HK:9999)
NetEase is a prominent Chinese internet company. It specializes in online games, e-commerce retailing, and email. NetEase also owns Cloud Music (HK:9899), a leading music streaming platform. It develops and operates some of the most popular and longest-running mobile and PC games in China and globally. NetEase is listed on the Hong Kong Stock Exchange and Nasdaq in the U.S.
In its third quarter Fiscal 2023 results, NetEase reported solid adjusted earnings, but revenue fell short of expectations. Net revenues increased 11.6% year-over-year to RMB27.3 billion, aided by strength in its Games and Related Value-Added Services segment and search engine Youdao. However, its Cloud Music segment’s net revenues fell 16.3%.
Meanwhile, net income of RMB7.84 billion grew 17.2% compared to the prior-year period. Management is highly bullish about NetEase’s gaming portfolio featuring new and innovative titles that continue to drive higher revenues. Plus, Cloud Music and its online retail store Youdao continue to innovate and are expected to offer products and content that will garner higher engagement.
Is NetEase a Good Stock to Buy?
With four unanimous Buys, 9999 stock has a Strong Buy consensus rating on TipRanks. Also, the NetEase share price target of HK$220.50 implies an impressive 36% upside potential from current levels. Year-to-date, 9999 shares have gained 44.1%.
BYD Co. (HK:1211)
BYD Co. is the leader in the electric vehicle (EV) market in China. Also, the company is rapidly expanding its global footprint as demand in the mainland stalls owing to macro pressures. To date, the company has sold around 200,000 pure electric and hybrid vehicles outside China in nearly 58 global markets. Recently, BYD announced the production of its six millionth vehicle at its facility in Zhengzhou, China.
In its Q3FY23 results, BYD reported operating revenues of RMB162.15 billion, up 38.5% year-over-year. Also, net profits jumped 81% to RMB9.65 billion. The company attributed the improved results to the growing sales volume of its new energy vehicles.
Is BYD a Buy, Sell, or Hold?
With six Buys and one Hold rating, 1211 stock commands a Strong Buy consensus rating on TipRanks. The BYD Co. share price forecast of HK$323.30 implies a 61.7% upside potential from current levels. Moreover, BYD shares have gained 4.4% so far this year.
Ending Thoughts
Despite the slower-than-anticipated recovery in the Chinese economy and the prevalent macro headwinds, companies like NetEase and BYD are delivering solid results. Notably, both companies have tremendous potential to become leaders in their respective markets while expanding internationally. Consequently, analysts remain highly optimistic about their growth prospects, making them interesting stocks to consider.
