20 Chinese Stocks - High Cash, Low P/E, Profitable Growth...But, it is China...

Value Investing with Sven Carlin, Ph.D.•Sep 30, 2026

Summary

Sven provides a deep dive into the Chinese tech landscape, focusing on the top 20 companies within the China Internet ETF (KWEB). Sven observes that many of these businesses are trading at historically low valuations despite having strong balance sheets and dominant market positions. Sven emphasizes that for value investors, the current negative sentiment towards China—driven by regulatory fears and geopolitical tensions—often signals the best time to buy, provided one manages risk through diversification and avoids over-exuberant market peaks.

Tencent: Sven describes Tencent as the king of the Chinese market, boasting an ecosystem that integrates payments, gaming, and social media more effectively than Western counterparts. Sven notes that with a P/E ratio of 15 and a robust AI strategy, the company is a core holding for those seeking exposure to the Asian market. Sven suggests buying when the market mood is pessimistic and selling during periods of high enthusiasm.

JD.com: Sven confirms owning shares in JD.com and highlights its 3.7% buyback yield alongside a growing dividend. Sven argues that JD's massive logistics infrastructure creates a formidable moat that competitors struggle to match. Sven believes the high free cash flow per share makes it an attractive value play at current levels.

Alibaba: Sven expresses caution regarding Alibaba, stating that its current price is too high for Sven's entry criteria. Sven notes that while the company has an AI narrative and stable e-commerce, it faces intense competition that is eroding its technological edge in retail. Sven argues that the declining cash flow from older segments requires a steeper discount to be considered a safe investment.

Baidu: Sven points out the irrational valuation of Baidu, which trades at a market cap of approximately $30 billion while holding $40 billion in cash and investments. Sven explains that investors are essentially getting the core business and AI ventures, such as robotaxis, for free. Sven views this as a classic value situation where the market price is lower than the net cash value.

Kuaishou Technology: Sven highlights Kuaishou as a potential "free bet" on AI due to its ownership of the Kling AI video generator. Sven mentions that at a P/E ratio of 10, the market is ignoring the explosive growth of its AI sector while the core short-form video business remains profitable. Sven contrasts this undervaluation with the high premiums paid for AI companies in the West.

Sven also addresses the risks of Variable Interest Entities (VIEs), concluding that while they pose a liquidity risk for U.S. investors, the structural risk is low for European investors with access to Hong Kong markets. Sven maintains that the ultimate risk is a conflict over Taiwan, but suggests that such an event would have global consequences far beyond just Chinese stocks.

Mentioned Stocks

BABA

Sentiment: HOLD

Reasoning: Sven states that Alibaba's price is currently too high and that competition is hurting its retail margins. Sven requires a lower entry point to consider it a high-conviction value investment.

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