The Matthews China Fund (Trades, Portfolio) disclosed it increased its position in Alibaba Group Holding Ltd. (BABA, Financial) and initiated 10 new positions during the first quarter. The top five new positions based on portfolio impact are China Mobile Ltd. (CHL, Financial)(HKSE:00941, Financial), AIA Group Ltd. (HKSE:01299, Financial), Zhongsheng Group Holdings Ltd. (HKSE:00881), China Gas Holdings Ltd. (HKSE:00384) and China Resources Land Ltd. (HKSE:01109).
Alibaba
The fund added 235,800 shares of Alibaba for an average price of $188.29 per share. With this transaction, the fund expanded the portfolio 4.03%.
The Chinese online retailer disclosed on May 4 that “robust growth in [Alibaba’s] core commerce business” and investments in longer-term growth initiatives contributed to a 58% revenue growth rate during the 12 months ending March 31 according to CEO Daniel Zhang and Chief Financial Officer Maggie Wu. Alibaba’s three-year revenue growth rate of 34.70% outperforms 95% of global specialty retail companies.
Alibaba’s profitability ranks 9 out of 10 as the company’s profit margins outperform 98% of global competitors. GuruFocus ranks the company’s business predictability 3.5 stars out of five, suggesting Alibaba has good business quality.
China Mobile
The fund invested in 3,056,000 shares of China Mobile for an average price of 75.97 Hong Kong dollars ($9.68) per share. With this transaction, the fund increased the portfolio 2.61%.
China Mobile said operating revenues increased 4.5% year over year driven by several factors, including an improved revenue structure. Revenues from wireless data traffic accounted for over 50% of total telecommunication service revenues “for the first time” according to the company’s April 26 annual report filing.
China Mobile’s profitability ranks 8 out of 10 as the company’s net profit margin of 15.42% outperforms 84% of global competitors, which include Verizon Communications Inc. (VZ) and AT&T Inc. (T) according to the company’s competitive comparison page. GuruFocus lists six positive investing signs for China Mobile, including robust interest coverage and an excellent Piotroski F-score of 8. Additionally, China Mobile’s dividend yield of 3.91% is near a three-year high.
AIA Group
The fund invested in 2,501,600 shares of AIA Group for an average price of HK$65.53 per share. With this transaction, the fund increased the portfolio 1.99%.
AIA Group, a pan-Asian insurance provider, offers a wide range of products, including retirement savings plans, life insurance and accident insurance. Even though the company’s profitability ranks a modest 5, AIA Group’s net margin is near a 10-year high of 15.97% and outperforms 82% of global competitors.
Zhongsheng
The fund invested in 7,781,500 shares of Zhongsheng for an average price of HK$19.93 per share. With this transaction, the fund increased the portfolio 1.99%.
Zhongsheng, a major auto dealer in China, sells and services vehicles from major luxury and mid-to-high end brands, including Toyota Motor Corp. (TM, Financial), Volkswagen AG (XTER:VOW, Financial) and Fiat Chrysler Automobiles NV (FCAU, Financial). The company’s profitability ranks 7 out of 10 primarily due to expanding operating margins and a strong Piotroski F-score of 7.
China Gas Holdings
The fund invested in 5,016,200 shares of China Gas Holdings for an average price of HK$23.86 per share. With this transaction, the fund increased the portfolio 1.71%.
China Gas Holdings engages in the wholesale and retail businesses of natural gas and liquefied petroleum gas across China. GuruFocus lists three positive investing signs for the company, including expanding operating margins, consistent revenue growth and a strong Piotroski F-score of 7.
China Resources Land
The fund invested in 4,848,000 shares of China Resources Land for an average price of HK$28.45 per share. With this transaction, the fund increased the portfolio 1.66%.
China Resources Land engages in the development and sale of properties and other real estate services. The company’s profitability ranks 8 out of 10 primarily due to a three-star predictability rank and returns that outperform over 70% of global competitors.
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Disclosure: I do not have positions in the stocks mentioned.
