The Hang Seng Index of China-based equities is rebounding a bit after one solid year of steady selling. From about 31,000 in early 2021 down to 23,000 by the beginning of 2022, that’s a 25% drop.
Are there value stocks to be found after so much selling in the sector? Well, here are three Chinese companies traded on the New York Stock Exchange, all of which can be purchased now at prices below their book value.
FinVolution Group (FINV, Financial) is a credit services business headquartered in Shanghai with a market capitalization of $1.06 billion and an enterprise value of $322.25 million. The price-earnings ratio is very low at 3.07 and it’s trading at a 28% discount to its book value. The price-sales metric is just 0.83.
Earnings per share this year are off by 13.50%. The past five-year earnings per share growth rate is 66.90%. FinVolution has no long-term debt. Investors are paid a $1.81 per share dividend, which comes to an annualized yield of 4.29%. GuruFocus' summary of financials shows three good signs, one medium warning sign and two severe warning signs:
China Life Insurance
China Life Insurance Co. Ltd. (LFC, Financial) is based in Beijing with a market capitalization of $49.80 billion and an enterprise value of $124.71 billion. The stock trades at just 67% of its book value with a price-earnings ratio of 5.22. The price-sales metric is a low 0.81.
Earnings per share this year are down by 13.80%. The earnings growth record for the past five years is 7.70%. Shareholder equity greatly exceeds the amount of long-term debt. China Life Insurance pays a dividend of $1.04 per share for a 5.54% annual yield.
The GuruFocus summary of its financials finds five good signs, four medium warning signs and one severe warning sign:
China Petroleum and Chemical
China Petroleum and Chemical Corp. (SNP, Financial) is an oil and gas energy company with headquarters in Beijing. The market capitalization is $63.23 billion with an enterprise value of $98.73 billion. With a price-earnings ratio of just 4.41 and trading at just 52% of its book value, the stock is a classic Benjamin Graham-style value.
This year’s earnings per share growth is -42.40%. The past five-year earnings per share growth rate is just 0.30%. Shareholder equity exceeds the amount of long-term debt. The dividend paid is $4.49 per share, which yields 8.64%, high enough to consider how long it may continue at that level.
China Petroleum and Chemical is relatively lightly traded for an NYSE-listed security with average daily volume of just 117,000 shares. GuruFocus' summary of financials shows three good signs, two medium warning signs and four severe warning signs: