Everyone is talking about “green shoots” coming out of the Chinese economy. GDP appears to have stabilised, retail sales and industrial production are strong, and an early preliminary survey suggests manufacturing activity is slowing at a slower rate.The Global Equity Strategy team at Morgan Stanley just released a report titled The Best Global Opportunities To Position For China Recovery.
The analysts provide multiple lists of stocks with varying characteristics. One interesting list consisted of American Depository Receipts (ADRs) of Chinese companies — that is, Chinese companies that trade on U.S. stock markets.
Morgan Stanley identified nine listings of ADRs of Chinese companies with sufficient daily liquidity, which means that each stock is easy to trade in the market.
Description: China Mobile services the world's largest mobile customer base -- nearly 650 million -- on the world's largest mobile network. The company is a collection of over 30 subsidiaries. In 2011, annual operating revenue rose by 8.8%. The 3G Customer Base is the fastest-growing group of customers and looks to drive future revenues.
Sources: Morgan Stanley, China Mobile Ltd.
Description: CNOOC is China's largest producer of offshore crude oil and gas, producing 909,000 BOE per day in 2011. The company engages in exploration, development, and production of these energy sources. Net production rose by 8.3% from 2Q to 3Q this year. Over the past five years, revenues have more than doubled.
Sources: Morgan Stanley, CNOOC Ltd.
Description: PetroChina is the country's largest oil and gas producer and distributor, and sees expanding its overseas operations as a future driver of revenues. PTR boasts assets of over $2 trillion (RMB) and produced 452.4 million barrels of crude oil over the 1H 2012.
Sources: Morgan Stanley, PetroChina Co
Description: CHU provides services to over 372 million customers in 31 Chinese regions. Revenues for 1H 2012 were $121.69 billion (RMB), a 20% increase from 1H 2011, driven by service revenue from mobile devices, particularly those equipped with 3G. CHU is engaged in many capital expenditures as part of its 'Broadband China' strategy, which aims to improve the quality and capacity of its networks.
Sources: Morgan Stanley, China Unicom Ltd.
Description: China Life and its subsidiaries amount to the world's largest commercial insurance group, and provides individual life, group, accident, and health insurance policies. The company is a state-owned enterprise. In addition, China Life is one of the largest institutional investors in the Chinese stock markets. Currently, LFC is ranked 113 on the list of Fortune Global 500 companies.
Sources: Morgan Stanley, China Life Ins Co.
Description: The Chinese government holds a controlling share of SNP, whose business activities include industrial investment, exploration, storage, transportation, and refining of oil and gas, and the construction and installation of petroleum and petrochemical equipments. In 2011, the company ranked 5 in the Fortune Global 500 list.
Sources: Morgan Stanley, China Petro & Chem Corp.
Description: Yanzhou is the only Chinese coal enterprise whose shares are available both domestically and abroad. YZC engages in coal production, preparation, process, marketing, and transportation. In their 2012 interim report, the company had gross sales of coal totaling over $27 million (RMB) and total current assets of over $33 million (RMB).
Sources: Morgan Stanley, Yanzhou Coal
Description: ACH is China's largest -- and the world's second largest -- producer of alumnia and aluminium. Revenues for the 1H 2012 totaled $71.7 billion (RMB), and the company posted losses over this timeframe. ACH is focused on cost-cutting measures to boost its profit margin.
Sources: Morgan Stanley, aluminium Corp. of China
Description: China Telecom claims to be the world's largest provider of wireline telecommunications, serving 170 million in the sector in addition to 126 million mobile and 77 million broadband customers. Net profits for 1H 2012 were $8.8 billion (RMB) with operating revenues over $138 billion (RMB). 68% of analysts recommend CHA as a 'buy.'
Sources: Morgan Stanley, China Telecom Corp.