Recently, investment analysts have upgraded several U.S.-listed Chinese stocks to buy, highlighting a positive outlook for these companies. This comes as many Chinese companies are releasing their earnings reports for the last quarter of 2023 and the full year. Despite skepticism surrounding China’s ability to meet its growth target for 2024 without additional stimulus, the country has reported better-than-expected economic data in various sectors.
One of the Chinese stocks that analysts are turning bullish on is Tencent Music Entertainment. Citi recently upgraded the stock to buy, setting a price target of $13 a share, representing an increase of nearly 18% from the previous day’s close. Tencent Music Entertainment is a major player in the online music industry in China and has shown strong performance in its fourth quarter results. The company’s subscription music business, along with its expanding capabilities in the music value chain, are expected to support sustained growth in the future.
Another Chinese stock that has received an upgrade from analysts is Kingsoft Cloud. JPMorgan upgraded the cloud services company to overweight, despite lowering its price target. The analysts believe that Kingsoft Cloud will break even in the first quarter on an earnings basis and achieve break-even for the full year of 2024, which would be a significant milestone for the company. The optimistic outlook is based on revenue shifting to higher-margin sources such as artificial intelligence, as well as a decrease in costs due to asset write-offs.
Lastly, Vnet Group, a data center operator, was upgraded by BofA to a buy rating with a price target of $2.70. Although the price target was reduced from the previous level, it still represents a significant increase from the current share price. Analysts expect that news of a local government contract and increasing demand from short video companies will drive revenue growth for Vnet Group in the coming years. The company already has a strong presence with data centers in over 20 cities in China.
In addition to the upgrades mentioned above, analysts are also finding more reasons to be incrementally optimistic about other Chinese stocks. For example, JPMorgan recently upgraded shares of video streaming and gaming company Bilibili to neutral, citing potential revenue growth from new game releases. The company’s positive operating cash flow in the past quarters has also contributed to the favorable outlook. Overall, analysts believe that there is limited downside risk for these Chinese stocks in the near future.
The recent upgrades of U.S.-listed Chinese stocks by investment analysts reflect a positive sentiment towards these companies. Despite challenges and uncertainties in the global economic landscape, these stocks have shown resilience and potential for growth. Investors should keep an eye on these emerging opportunities in the Chinese market and consider them as part of a well-diversified investment portfolio.