We will discuss some interesting asian stock in the following pages. These are our Best Asian Stocks to buy and hold.
Readers interested in other names in the top 10 should see our previous articles, where many of these have been previously discussed.
Best Asian Stocks to Buy and Hold.
Samsung Electronics (5.9%) – the only viable alternative to TSMC
Samsung Electronics (www.samsung.com) is a global leader in semiconductors and electronics. Its primary focus is the manufacture and distribution of memory chips, phones and electronic components. The rationale for holding the position is similar to that of TSMC discussed above. Like TSMC, Samsung Electronics is very cash-generative and reinvests heavily in its business; it also makes both memory and non-memory chips and is well positioned to benefit from their convergence. We considers that Samsung Electronics is the only viable alternative to TSMC and while we think TSMC is the higher-quality company, we also think that Samsung Electronics offers superior upside potential.
Hence Samsung group has the financial and human capital that permits it to invest and innovate at scale and remains top in our list of Best Asian Stocks to Buy now.
Dailyhunt (4.8%) – the TikTok of India
Dailyhunt (www.dailyhunt.in) is an Indian content and news aggregator application based in Bangalore, India that provides local language content in 14+ Indian languages from over 3000+ content providers. It is headquartered in Bengaluru, with offices in Delhi, Mumbai, and teams across multiple towns and cities in India. We describe it as the TikTok of India and that its USP is its focus on local languages.
We believe that its hold on the space is so strong that it has effectively forced TikTok to exit India as it cannot get sufficient traction. It has a growing user base and that it is positioned to monetise in the next couple of years.
ByteDance, which owns TikTok, was invested in Dailyhunt’s parent, VerSe innovation. The position has been sold recently which we think that the motivation is largely political and is more of a reflection of Chinese discord over the support that Taiwan is receiving on the platform than a view on the credibility of the business model.
Delhivery (3.5%) – a play on Indian e-commerce
Delhivery (www.delhivery.com) is a pan-Indian logistics and courier services company that we last discussed earlier. At that time, it was still an unlisted holding, but the company had filed plans with the Indian regulator for an IPO seeking to raise US$1bn. The company listed in May 2022 at a premium to its unlisted valuation, following an initial public offering (IPO) that was 1.63x oversubscribed.
Delhivery, which began life in 2011 as a food delivery firm, is now a full suite of logistics services company with operations in over 2,300 Indian cities. We believe that e-commerce has around a 5% market penetration, which it could compound at around 50% for decades to come.
Previously, a system of interstate taxes made it difficult to move products between States, but these have been swept aside by government reforms designed to liberalise the economy. In this environment, Delhivery is prospering and scaling very quickly. Reflecting the strength of the our selection conviction, it remains one of the largest overweight exposures to the benchmark index.
Samsung SDI (2.8%) – exposed to the energy transition
Samsung SDI (www.samsungsdi.com) is the battery-making unit of South Korea’s Samsung Group.
Samsung has been focusing on its ‘prismatic’ lithium ion batteries, which are more expensive than traditional cylindrical batteries but offer a technology that is very scalable. However, it is now ramping up facilities to manufacture cylindrical batteries to supply its products to Tesla and other electric vehicle (EV) manufacturers.
It has been reported that production is being expanded at the company’s Cheonan plant and some of this will be converted to make larger batteries for EVs. Samsung is currently testing to produce two different types of large-sized cylindrical batteries (same diameter but different lengths) with the aim that both can be produced with minimal production line changes so as to minimise costs. Mass-production is being targeted for 2025.
Jadestong Energy (2.8%) – benefitting from elevated oil and gas prices
As we explained in our November 2021 note (see page 16 of that note), Jadestone Energy (www.jadestone-energy.com) is a holding that falls into our surprise’ bucket. It is an upstream oil and gas development and production company in the South East Asia-Pacific region.
Its portfolio includes producing assets in Australia, Indonesia, Malaysia, Vietnam and New Zealand. Its speciality is acquiring small- to medium-size lots that have been poorly managed by their previous owners (typically state-owned enterprises) and investing to boost production and extend their useful lives.
During its most recent financial years, Energy was our second-best performing sector, which was led by Jadestone Energy’s performance. Jadestone has benefitted significantly from rising oil and gas prices since the invasion of Ukraine and has continued to sweat its assets.
Reliance Industries (2.6%) – cash flow finances new India investments
Reliance Industries (www.ril.com) is an Indian multinational conglomerate with a diverse range of businesses including energy, petrochemicals, natural gas, retail, telecommunications, mass media, and textiles.
The core of the business is its petrochemical and energy, which we describe as “a cashflow monster”. However, what makes the company interesting is that this cash is being invested in new India.
For example, the company built India’s first 4G mobile network, marketed under the brand Reliance Jio, which completely disrupted the mobile telecoms market in India. This market now has two dominant players, of which Reliance is one.
The company has a very aggressive management team and this approach of entering and dominating a market is a repeatable formula for the company.
It is one of the most interesting companies in the portfolio and it could become the e-commerce digital media champion for India and remains top in our list of Best Asian Stocks to Buy now.
JD.com (2.5%) – added to on depressed valuations
JD.com (corporate.jd.com – also known as Jingdong) is a Chinese e-commerce company headquartered in Beijing. It is the largest Chinese retailer, via its dominant share in the online ecommerce 3C (computers, communications and consumer electronics) market, and it is the second player in overall Chinese e-commerce (along with Alibaba, it is one of the two massive business-to-consumer (B2C) online retailers in China).
JD.com had been given a boost by the pandemic as consumers have switched more and more of their purchases online (its one-stop-shop approach – an e-commerce platform offering a wide range of products, supported by its own logistics network – proved to be particularly resilient).
We have been taking advantage of depressed valuations on the back of negative sentiment towards China to expand the position.
Company’s strong logistics network and focus on customer service is driving increased revenue and market share.
Tata Motors (2.3%) – building an EV ecosystem
Tata Motors (www.tatamotors.com) is the largest automobile manufacturing company in India and part of the Tata Group (an Indian conglomerate that is one of the biggest and oldest industrial groups in India).
It offers an extensive range of passenger and commercial vehicles including passenger cars, trucks, vans, coaches, buses, sports cars, construction equipment and military vehicles.
The company has performed very strongly and was the largest positive contributor to performance in the last financial year.
However, Tata Motors has benefitted from a strong turnaround in its domestic and automotive business and, longer-term, is well placed to benefit from rapid growth in the EV market as the world decarbonises.
In addition to having a strong EV pipeline, it has been working with other Tata Group companies, including Tata Power, Tata Chemicals, Tata Auto Components to build an EV ecosystem called the ‘Tata UniEVerse’.
Bank Rakyat Indonesia (2.3%) – benefitting from its network of 15,000 micro lending units
Bank Rakyat Indonesia (also discussed on page 8 – www.ir-bri.com) is one of the largest banks in Indonesia. It specialises in small-scale and micro-finance lending and borrowing to a client base of approximately 30m retail customers.
It is the oldest bank in Indonesia, with a well-recognised brand, and 53% is owned by the state. It also has a corporate business, although this is relatively small.
Bank Rakyat has built out a network of some 15,000 micro-lending units on the Indonesian islands (a combination of over 4,000 branches, units and rural service posts).
This network gives the bank a huge advantage that is impossible to replicate; it effectively gives the bank a monopoly position. The bank has demonstrably good lending and underwriting practices, having been profitable since 1987.
Merdeka Copper Gold (2.2%) – a play on demand for green energy
Merdeka Copper Gold (merdekacoppergold.com) is an Indonesian mining company that produces gold, silver and copper as well as various other minerals. Its operations are spread across a number of Indonesia’s islands, and it has the rights to the country’s second-largest copper and gold deposits.
Merdeka currently has two mines in production – the Tujuh Bukit Gold Mine and the Wetar Copper Mine as well as several development projects. These include the Tujuh Bukit Copper Project, an underground copper mine in Banyuwangi, which is one of the largest undeveloped copper deposits in the world; and the Pani Gold Project in Gorontalo, Sulawesi, which is set to become one of the largest primary gold mines in the Asia Pacific region.
Merdeka is also building its AIM (Acid, Iron, Metal) mineral processing plant in Morowali, Central Sulawesi. The AIM plant will produce raw materials for the batteries essential for green energy.
Merdeka fits neatly into its theme of gaining exposure to commodities that are essential for the energy transition and, operationally, the company offers an attractive combination of management with a good track record, as well as supportive local shareholders.
These were our Best Asian Stocks to Buy and Hold for long term investment. Hope you liked our article do read our other article on http://www.equitygyan.in/blogs