The technology landscape in China is heating up, with many Chinese companies now giving stiff competition to global tech-giants. And since the technology sector has become one of the major growth drivers of the Chinese economy, tech companies there are making substantial gains.
Regulatory threats have been weighing on Chinese tech companies and have put them under a spotlight in recent months. But these threats are expected to dissipate eventually as the country strives to become a global technological leader. So, we think betting on affordable Chinese tech stocks like FinVolution Group (FINV) and Cango Inc. (CANG) could be highly rewarding.
These two stocks have sound fundamentals but are currently trading below $10. With their continuing efforts to enhance their technological capabilities and strengthen their platforms, we believe these companies are well-positioned to deliver huge returns.
FinVolution Group (FINV)
Headquartered in Shanghai, China, FINV is an investment holding company that operates in the online consumer finance industry. The company’s financial platform connects underserved individual borrowers with financial institutions and provides standard and other loan products to its customers.
In January, FINV received a Capital Markets Services license from the Monetary Authority of Singapore (MAS), which allows it to conduct regulated activities in capital markets products in Singapore. This marks a significant milestone for the company because it strengthens its position regarding developing comprehensive financial services in the Southeast Asia region.
FINV’s net revenue increased 12.6% year-over-year to RMB1,793.3 million in the third quarter ended September 30, 2020. The company’s operating profit rose 6.2% from the year-ago value to RMB689 million.
FINV beat the Street’s EPS estimates in three of the trailing four quarters. A consensus revenue estimate for 2021 represents a 15.2% increase from the same period last year. The stock closed yesterday’s trading session at $5.41, gaining 181.8% over the past year.
FINV’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
FINV has a B grade for Sentiment, Value and Quality. Of 86-stocks in the China group, it is ranked #5.
In addition to the POWR Ratings grades I’ve just highlighted, you can see the FINV ratings for Growth, Momentum, and Stability.
Cango Inc. (CANG)
Founded in 2010, CANG is an automotive transaction service platform connecting dealers, financial institutions, car buyers, and other industry participants in China. The company facilitates financial transactions between financial institutions and car buyers and automotive transactions between automotive wholesalers, dealers, and car buyers.
This month, CANG’s board of directors authorized a share repurchase program under which it may repurchase up to $50 million worth of its outstanding American depositary shares as well as ordinary shares. CANG intends to fund the repurchases from its existing cash balance.
CANG’s total revenue has increased 23.8% year-over-year to RMB434.9 million in the third quarter, ended September 30, 2020. Its net income rose 1348.7% from the year-ago value to RMB1769.4 million, while its EPS rose 1415.4% year-over-year to RMB11.82. The company’s after-market services facilitation revenues increased to RMB68.9 million or 15.8% of total revenues over this period.
A consensus EPS estimate for the quarter ending March 31, 2021 represents a 700% improvement year-over-year. Also, CANG beat the Street’s EPS estimates in three of the trailing four quarters. The consensus revenue estimate for 2021 represents a 70.7% increase from the same period last year. The stock closed yesterday’s trading session at $8.59, gaining 18.5% over the past year.
CANG’s strong fundamentals are apparent in its POWR Ratings also. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. CANG also has an A grade for Sentiment, and a B for Growth and Quality. In the same industry, the stock is ranked #2.
To see additional POWR Ratings for Value, Stability, and Momentum for CANG, click here.
The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
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FINV shares were trading at $5.23 per share on Thursday morning, down $0.18 (-3.33%). Year-to-date, FINV has gained 95.88%, versus a 2.58% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...
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