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2 Chinese Stocks to Buy on the Dip

China has endured a tough time due to rising COVID-19 cases and a slowing economy. However, as the economy opens up and the government provides ample support to drive growth, it could be wise to buy Chinese stocks FinVolution (FINV) and Viomi Technology (VIOT) on their dips. Let’s discuss…

China reported a 0.4% GDP growth from the year-ago period in the second quarter. The growth rate was weakest since the first quarter of 2020. The GDP growth came much below analyst estimates due to the country’s Zero-Covid approach.

The stringent lockdowns affected productivity, thus hampering growth. However, as the lockdowns have eased, businesses have started functioning normally, and the government believes that a stable recovery is already underway. Senior Communist Party officials have said that the government will not hesitate to introduce new policies to support growth.

The People’s Bank of China (PBOC) said it would prop up the slowing economy by keeping liquidity reasonably ample with a priority on stability and taking steps to boost confidence. Also, China has started easing its crackdown on the technology sector to boost the sagging economy.

Given this backdrop and the uncertainties surrounding the U.S. economy, it could be wise to scoop up Chinese stocks FinVolution Group (FINV) and Viomi Technology Co., Ltd (VIOT) on their dips.

FinVolution Group (FINV)

Headquartered in Shanghai, China, FINV is engaged in operating an online consumer finance platform. The company’s products and services include loan services and investment services.

FINV’s total transaction volume (China’s mainland) increased 48.1% year-over-year to RMB39.70 billion ($5.87 billion), while its total transaction volume (international) increased 13.2% year-over-year to RMB0.86 billion ($127.29 million) for the first quarter ended March 31, 2022.

The company’s net revenue increased 15.8% year-over-year to RMB2.44 billion ($361.16 million). Also, its cash, cash equivalent, and restricted cash at the end of the period increased 16.4% year-over-year to RMB7.11 billion ($1.05 billion).

Analysts expect FINV’s EPS and revenue for fiscal 2023 to increase 13.6% and 18.5% year-over-year to $1.36 and $1.71 billion, respectively. Over the past three months, the stock has gained 19.8% to close the last trading session at $4.54. It is currently trading 38% below its 52-week high of $7.33, which it hit on November 15, 2021.

FINV’s POWR Ratings reflect solid prospects. It has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

It has a B grade for Value, Sentiment, and Quality. It is ranked #2 out of 44 stocks in the China industry. Click here to see the other ratings of FINV for Growth, Momentum, and Stability.

Viomi Technology Co., Ltd (VIOT)

Headquartered in Guangzhou, China, VIOT, through its subsidiaries, develops and sells internet-of-things-enabled smart home products. The company offers IoT-enabled smart home products such as smart water purification systems, refrigerators, oven steamers, washing machines, and range hoods. It also provides a suite of complementary consumable products and small appliances, such as blenders, portable fans, and rice cookers.

For the fiscal first quarter ended March 31, 2022, VIOT’s total current liabilities declined 14.7% to RMB1.36 billion ($201.30 million), compared to RMB1.59 billion ($235.35 million) for the fiscal year ended December 31, 2021. In addition, its gross profit declined 29.4% year-over-year to RMB187 million ($27.67 million).

For fiscal 2023, analysts expect VIOT’s revenue to increase 10.9% year-over-year to $944.70 million. Over the past three months, the stock has lost 9.5% to close the last trading session at $1.52. It is currently trading 75.2% below its 52-week high of $6.13, which it hit on August 10, 2021.

VIOT’s POWR Ratings reflect solid prospects. The stock has an overall B rating, equating to a Buy in our proprietary rating system.

It has an A grade for Value and Sentiment. Within the same industry, it is ranked #4. To see the other ratings of VIOT for Growth, Momentum, Stability, and Quality, click here.

FINV shares were trading at $4.73 per share on Thursday morning, up $0.19 (+4.19%). Year-to-date, FINV has gained 0.89%, versus a -12.36% rise in the benchmark S&P 500 index during the same period.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.


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