13 Hong Kong Blue Chip stocks that managed to deliver gains despite bearishness (2024)

The Chinese market in 2023 has faced significant challenges, contrary to initial expectations of a strong economic recovery after pandemic restrictions were lifted.

Rising geopolitical tensions, Beijing’s crackdown on firms, and poor economic results have led to a decline in stock prices, as reflected by the -4.2% year-to-date performance of the Hang Seng Index in Hong Kong. (vs the S&P500 which is already up 16% YTD).

However, amidst the bearishness, several Hong Kong Blue Chip stocks have managed to thrive. In this post, we will highlight:

13 HK Blue Chip stocks that managed to deliver gains despite bearishness

1) Trip.com (HKG:9961) (+0.44%)

Trip.com Group Limited is the largest online travel agency in China, owning well-known brands like Trip.com and Skyscanner.

Despite the challenges faced by the travel industry due to the pandemic, Trip.com has shown resilience and recovery. With the lifting of pandemic restrictions, the company experienced a strong rebound in hotel and air ticket bookings. This positive trend is expected to continue as travel restrictions ease further, making Trip.com an attractive investment option.

2) China Resources Mixc Lifestyle (HKG: 1209) (+0.52%)

China Resources Mixc Lifestyle Services is a China-based company specializing in property management and commercial operational services. The company offers a range of services for both residential and non-commercial properties, including stadiums, parks, and industrial parks.

For residential properties, China Resources Mixc Lifestyle Services provides property management services, value-added services, and community value-added services.

In addition to residential properties, the company also manages and operates commercial properties such as shopping malls and office buildings. Its commercial property services encompass pre-opening management, operation management, property management, and commercial subleasing services.

Year to date, the company experienced a slight recovery in its share price, which may be attributed to increased confidence in the real estate market after a crisis that affected the governance and financial prospects of property management companies in China. However, it’s important to note that the real estate crisis is not fully resolved, and its lingering effects could still impact the industry, including companies like China Resources Mixc Lifestyle Services.

3) Nongfu Spring Co (HKG: 9633) (+0.58%)

Nongfu Spring Co Ltd, a leading packaged drinking water and beverage company in China, has established itself as a prominent player in the industry. Renowned for its high-quality products and strong brand presence, Nongfu Spring offers a diverse range of offerings, including bottled water, functional beverages, and dairy products.

Despite the challenges brought about by the COVID-19 pandemic, Nongfu Spring has managed to showcase remarkable growth and profitability. In fact, the company achieved a double-digit increase in profits last year, a testament to its resilience.

The company’s defensive nature as a consumer staple and its robust brand recognition have played pivotal roles in maintaining stability, even during challenging market conditions. As COVID-19 restrictions gradually recede, Nongfu Spring’s profit margins have the potential to experience further improvements from the reduction of cost.

The company did so well that its founder made it into the top 10 richest briefly earlier this year:

4) CK Hutchison Holdings (HKG: 0001) (+1.59%)

CK Hutchison Holdings, a multinational conglomerate owned by the billionaire Li Ka-shing, stands as one of the biggest corporations listed on the main board of The Hong Kong Stock Exchange.

The company is known for its strong portfolio of assets and its presence in multiple geographic markets. CK Hutchison’s retail division operates a wide range of retail brands in various sectors, including health and beauty, luxury fashion, electronics, and supermarkets. Its infrastructure division manages and operates a global portfolio of ports, container terminals, and related businesses. The company’s telecommunications division provides mobile, fixed-line, and broadband services in multiple countries.

Despite a decline in share price since the announcement of the Vodafone and CK Hutchison merger, the company has managed to generate positive returns. Investors should closely monitor the company’s performance, especially regarding the merger and any potential synergies that may arise from it.

5) CK Infrastructure Holdings (HKG: 1038) (+2.33%)

CK Infrastructure Holdings, a subsidiary of CK Hutchison Holdings, is Hong Kong’s largest publicly traded infrastructure company. The company invests in and operates a diversified portfolio of infrastructure assets globally, including energy infrastructure (such as power generation and transmission), transportation infrastructure (such as airports, highways, and ports), water infrastructure, and waste management.

The company’s broad diversification in defensive sectors, much like Sembcorp Industries, has resulted in a relatively stable share price. In 2022, CK Infrastructure recorded a 3% growth in profit, reaching HK$7.7 billion. Its operations span across different regions, encompassing activities such as gas and power distribution, power generation, rolling stock leasing, water supply, sewage treatment, waste management, and toll roads in countries like Britain, Australia, New Zealand, Holland, Canada, and mainland China.

CK Infrastructure remains actively engaged in seeking new acquisitions, supported by a substantial cash reserve of HK$18 billion (US$2.3 billion). Its chairman, Victor Li Tzar-kuoi, son of tycoon Li Ka-shing, expressed confidence in the company’s ability to capitalize on global investment opportunities, particularly during times of challenges.

6) China Unicom Hong Kong Ltd (HKG: 0762) (+2.71%)

China United Network Communications Group Co., Ltd., commonly known as China Unicom, is a state-owned telecommunications operator in China. The company operates in various segments, including mobile businesses, fixed-line businesses, and others. Its mobile services encompass call services, roaming services, mobile broadband services, and value-added services such as short message services, multimedia message services, and wireless Internet access. China Unicom also offers new value-added services like mobile music, mobile television, and Wo portal services. In addition, the company provides fixed-line services, including broadband and Internet networks.

In its latest earnings report, the company witnessed an 11.2% year-on-year increase in net profit, primarily driven by the continuous growth in the number of subscribers.

With the ongoing expansion of connectivity in rural areas and the transition to the 5G network, China Unicom is poised to benefit from the increasing penetration of telecommunications services. This growth potential presents opportunities for the company to further expand its subscriber base and enhance its profitability in the telecommunications market.

China Unicom (along with several other stocks in this list) also made it into our list of HK Blue Chip stocks with >7% dividend yield.

7) Sands China Ltd (HKG: 1928) (+4.05%)

Sands China Limited is a integrated resort developer and operator in Macau, with the majority ownership held by Las Vegas Sands Corporation.

Sands China’s operations encompass a wide range of offerings, such as gaming areas, meeting spaces, convention and exhibition halls, retail and entertainment venues. Its integrated resorts provide comprehensive experiences for visitors, including accommodation, gambling facilities, and various entertainment options.

The reopening of the country after pandemic-related restrictions has had a positive impact on Sands China’s performance. The increased number of tourists seeking entertainment, gambling experiences, and accommodation has contributed to a significant boost in revenue. Additionally, the company has benefited from the resurgence of MICE (meetings, incentives, conferences, and exhibitions) activities, further driving its revenue growth.

8) Tencent Holdings Ltd (HKG: 0700) (+4.15%)

This company needs no introduction but as a recap…

Tencent Holdings Ltd is a investment holding company that offers value-added services, online advertising services, FinTech, and business services. The company operates through four main segments, namely VAS, Online Advertising, FinTech and Business Services, and Others.

The VAS segment focuses on providing online games, video account live broadcast services, paid video membership services, and other social network services. The Online Advertising segment engages in media advertising, social advertising, and other advertising businesses. The FinTech and Business Services segment offers commercial payment, FinTech, and cloud services. The Others segment encompasses activities such as film and television production, distribution, copyright licensing, and merchandise sales.

Similar to other stocks, Tencent’s share price experienced a gradual decline after reaching a peak in February. In the latest quarterly earnings report, the company exceeded revenue expectations but fell short on EPS. However, the positive aspect is that Tencent achieved a 2% year-on-year growth in revenue, which is a favorable sign compared to the previous three quarters of sales decline.

Looking ahead, this positive trend is anticipated to continue into the second quarter of the current fiscal year. Analysts predict revenue of approximately $21.2 billion, reflecting a 7% year-on-year growth. These projections indicate that Tencent’s financial performance is expected to maintain strong momentum.

9) CLP Holdings Ltd (HKG: 0002) (+6.58%)

CLP Holdings Limited is a investment holding company primarily involved in the generation and supply of electricity. The company operates a diversified portfolio of generating assets, utilizing various fuel sources such as coal, gas, nuclear, wind, hydro, and solar power. Its business activities also encompass transmission and distribution, as well as retailing electricity and gas. CLP operates through five segments: Hong Kong, Mainland China, India, Southeast Asia and Taiwan, and Australia.

In terms of stability, like other utility stocks, CLP exhibits relatively less fluctuation in its share prices. However, there has been an 8% increase in its share price following reports suggesting potential interest from Macquarie to acquire a stake of up to 50% in EnergyAustralia Holdings Limited, a wholly owned subsidiary of CLP.

Regarding the reported interest in acquisition, CLP emphasizes its commitment to participating in the energy transition in Australia. The company is actively exploring opportunities and seeking a long-term committed partner to jointly invest in energy transition initiatives. It is important to note that at this stage, all options are being considered, and there is no certainty that a transaction will materialize or, if it does, be completed.

10) Xinyi Solar Holdings Ltd (HKG: 0968) (+7.80%)

Xinyi Solar Holdings Limited is an investment holding company primarily involved in the manufacturing and sale of solar glass. The company operates through three main segments: Sales of Solar Glass, Solar Farm and Solar Power Generation, and Engineering Procurement and Construction (EPC) Services.

In terms of the Sales of Solar Glass segment, Xinyi Solar produces and sells various solar glass products, including ultra-clear processed glass for photovoltaic (PV) applications, such as raw glass and processed glass with features like tempered glass, anti-reflective coating, and back glass.

The Solar Farm and Solar Power Generation segment focuses on operating utility-scale ground-mounted solar farms, contributing to the generation of solar power.

Additionally, the company provides Engineering Procurement and Construction (EPC) services for solar farms, through its EPC Services segment.

Xinyi Solar Holdings faced some challenges after reporting disappointing full-year earnings, primarily due to a reduction in gross profit margins caused by lower selling prices and higher raw material costs for solar glass. However, analysts, such as Citi, believe that the pressure on profitability should gradually ease. They anticipate a recovery in sales volume, driven by the increasing demand for sustainable energy, especially with the Chinese Communist Party emphasizing the importance of renewable energy sources.

11) China Resources Power Holdings Co Ltd (HKG: 0836) (+10.39%)

China Resources Power Holdings Company Limited is an investment holding company based in Hong Kong that primarily focuses on the investment, development, and operation of power plants. The company operates through three main segments: Thermal Power, Renewable Energy, and Coal Mining.

The Thermal Power segment involves the investment, development, operation, and management of coal-fired and gas-fired power plants. It also includes the sale of heat and electricity generated by these plants.

The Renewable Energy segment is responsible for wind power generation, hydroelectric power generation, and photovoltaic power generation. Additionally, it includes the sale of electricity generated from renewable energy sources.

The Coal Mining segment is engaged in coal mining activities and the sale of coal.

Given that China Resources Power Holdings conducts its business primarily in China, with COVID-19 restrictions relaxation, the demand for energy have increase, which is likely the reason for the positively impact in the company’s top line. In addition to this, the company’s plans to spin off its new energy business generated excitement and anticipation, particularly in March.

12) CITIC Limited (HKG: 0267) (+15.10%)

CITIC Limited is an investment holding company with operations in several segments, including Financial Services, Advanced Intelligent Manufacturing, Advanced Materials, New Consumption, and New-type Urbanisation.

CITIC is a highly diversified business as you can see. In the Financial Services segment, it owns CITIC Bank, a prominent national commercial bank. Additionally, the company has subsidiaries engaged in property development, construction, steel manufacturing, and various other industries.

This diversified business portfolio positions CITIC well, particularly as China aims to increase domestic consumption. The company’s involvement in multiple sectors aligns with this objective. Recent financial data indicates a positive trend, with growing revenue and profits, which further supports the company’s position in line with the increasing domestic consumption trend.

13) Semiconductor Manufacturing International Corp (HKG: 0981) (+22.16%)

Last but not the least the company with the greatest gain.

Semiconductor Manufacturing International Corporation (SMIC) is the largest contract chip maker in mainland China. The company is primarily engaged in the manufacturing and sales of wafers, operating through two segments: the sales of wafers segment and the Mask Making, Testing, and Other segment.

The sales of wafers segment produces and sells wafers used in various products, including power management integrated circuits (PMIC), battery management integrated circuits (BMIC), microprocessors (MCU), CMOS Image Sensors (CIS), RF and wireless connectivity, touch controller integrated circuits (TCIC), and more. The Mask Making, Testing, and Other segment focuses on manufacturing semiconductor masks and providing wafer testing services. SMIC sells its products both domestically and internationally, serving markets such as the United States, Europe, and Asia.

In recent years however, SMIC has faced challenges due to U.S. sanctions that restricted its access to key chipmaking tools for manufacturing advanced semiconductors. Consequently, the company experienced its first decline in quarterly revenue in over three years. However, it’s worth noting that the industry as a whole has faced difficulties, as seen with Samsung, the world’s largest memory chip maker, which also reported a profit decline in the first quarter. This indicates that the challenges may be industry-wide rather than specific to SMIC.

Looking ahead, SMIC forecasts a recovery in the second quarter, expecting a quarter-on-quarter revenue increase between 5% and 7%. Many other chipmakers have also projected a recovery but only in the second half of the year. This positive outlook may be the reason why SMIC’s share price have performed much better than the general market.

Nevertheless, it is important to recognize that China’s semiconductor industry may face further measures targeting its development.

But don’t give up on SMIC just yet. As China’s largest semiconductor manufacturing company, SMIC plays a significant role in Beijing’s ambitions to enhance the domestic semiconductor industry and compete with rivals like Taiwan’s TSMC. Should any semiconductor company succeed, it is likely that SMIC will be among the key contenders.

It is not too late!

Don’t be disheartened if you missed out on investing in these stocks. In fact, due to the recent concerns surrounding the Chinese economy, many of these Chinese stocks have experienced a decline, creating an excellent opportunity for investors to reconsider them.

Seize this chance to delve deeper into these companies and discover their potential. Who knows, they might just turn out to be your next investment superstars!