5 Undervalued Chinese Stocks To Look at Right Now

When President Trump announced his reciprocal tariff policies, international markets were rocked as companies in those countries were facing massive tariff hikes, but China was singled out in particular. This was due to China’s long history of product market dumping, prohibitively high tariffs on agricultural goods, rampant intellectual property theft, and most recently, fentanyl smuggling. Unsurprisingly, President Xi Jinping tried to play tit for tat, with tariffs escalating in a policy war, reaching triple figures. Recently, China and the US finally came to terms and de-escalated the rift, signing an agreement with a much more reasonable level of reciprocal tariff rates and cooperation going forward on the fentanyl smuggling issue.

As a result, those Chinese listed companies that suffered substantial price drops are now resuming normal business. There is thus a window of opportunity for investors who are comfortable investing in stocks listed on the Hong Kong or Shenzhen Exchange to ride the bounce back, like those who bought Tesla or Nvidia during their low periods earlier in late March and April. 

The following companies represent some of the wider discrepancies between current and assessed value for consideration. Current value quotes are market price at the time of this writing. For the sake of easy reference, prices are listed in HKD, CN¥, and US$.  

Conversion ratios: CN¥1 = US$0.14,  HKD1 = US$0.13  

Wenzhou Yihua Connector Co., Ltd

Stock: Wenzhou Yihua Connector Co., Ltd. (SZSE: 002897)

Industry: Electronic Components

Fair Value: CN¥76.64 (US$10.70) 

Current Value: CN¥37.70 (US$5.26)

Anyone who has had to deal with connecting electronic devices, from rechargers, to cable TV, to internet modems all the way up to more complex, communications, and audio-video production and information processing studios and centers will certainly be aware of Yihua products. The company specializes exclusively in manufacturing all of the different connectors used for for these devices, and has supplied them in massive quantities over the past 20 years to many major customers, including:

• Foxconn
• Honeywell
• Huawei
• ZTE
• Flextronics
• Aptiv
• ….and many others….

Yihua was founded in 1995, and trades on the Shenzhen Stock Exchange. In addition to the computer, communications, data, video, and audio industries, Yihua also supplies connectors  used in the automotive and commercial electric industries. Yihua presently is headquartered in Yueqing City, Zhejiang Province, and has additional subsidiary and representative offices in Dongguan, Suzhou, Wuhan and Hunan, as well as in Beijing, Shanghai, Shenzhen, and Taiwan.

Everest Medicines, Ltd.

Stock: Everest Medicines (HKSE: 1952)

Industry: Pharmaceuticals and Biotechnology

Fair Value: HKD: $107.01 (US$13.63)

Current Value: HKD: $67.50 (US$8.60) 

Although less publicized than with the tech and communications fields, the US healthcare industry is very dependent on Chinese pharma factories. Vast quantities of imported generic treatments come from China; as much as 95% of ibuprofen, 91% of hydrocortisone, and 45% of penicillin – are just a few examples. Similarly to how China’s innovations in robotaxis and other sectors are now making their own cutting edge industry breakthroughs, biotech appears to be another field. Shanghai headquartered Everest Medicines, Ltd. is one such company.

Everest Medicines has developed a portfolio of proprietary treatments for renal disease, infectious disease, and autoimmune disorders. Although its primary market focus is China and the Pacific Rim region, Everest Medicines’ EVM14 oncology vaccine for lung cancer tumors cleared US FDA IND approvals for clinical development. Additionally, Everest Medicines is a conduit for US pharmaceuticals in China and the Pacific Rim markets. It has licensing agreements with Gilead Sciences for Trodelvy, and for Tarpeyo (Nefecon) with Calliditas Therapeutics, AB. 

In addition to the Hong Kong Stock Exchange, Everest Medicines stock trades on several German stock exchanges, such as the Frankfurt, Berlin, Dusseldorf, Munich, and Stuttgart Exchanges. 

Hangzhou Zhongtai Cryogenic Technology Corp.

Stock: Hangzhou Zhongtai Cryogenic Technology Corp. (SZESE: 300435)

Industry: cryogenic equipment

Fair Value: CN¥33.21 (US$4.63) 

Current Value: CN¥15.16 (US$2.12)

Presently valued over $12 billion, the cryogenic equipment industry is expected to grow to $16.6 billion by 2028. Cryogenic equipment has become indispensable for the following uses, among many others:

• Freezing industrial gases, i.e. liquid nitrogen, oxygen, for the food and beverage, steelmaking, and chemicals sectors, among others.
• Freezing Natural Gas to create LNG, a crucial energy product used throughout the world.
• Freezing Healthcare gases, organ transplant transport, and other applications.

Hangzhou Zhongtai Cryogenic Technology Corp. serves the domestic Chinese and Pacific Rim markets with its plate-fin heat exchangers, cold boxes and packaged units. Other products include cold box shells, towers, pressure vessels and others. Its products are applied in basic industrial areas, including energy, chemical industry, metallurgy, electric power and other industries. Hangzhou Zhongtai Cryogenic’s exports to the US compete with cryogenic equipment products from Parker Hannifin, Flowserve, and Chart Industries, so that business segment is expected to resume back to previous levels. 

BYD (Build Your Dreams)

Stock: BYDDF (OTCPK: BYDDF) – H Shares

Industry: Electric vehicles, rechargeable batteries

Fair Value: HKD: $184.06 (US$23.45)

Current Value: HKD: $122.46 (US$15.60)

Although Elon Musk’s Tesla is often the first name in EVs, China’s EV rival BYD (Build Your Dreams) outsells Tesla in vehicles sold in China. BYD is not well known as it presently does not sell its vehicles in the US. However, with EV mandates in the US apparently now scuttled under recent legislation and the market opening up for more free choice within the driving public, BYD may secure a foothold in the US market to further assert its place as Tesla’s biggest EV rival.

With 4 million EVs delivered in 2024 compared to Tesla’s 1.7 million, BYD is eating Tesla’s lunch in China (90% market share), the PacRim, Latin America, Australasia, and in Europe (especially UK, Germany, France, Hungary, and Spain). 

Similar to Tesla’s expansions into batteries and recharging stations, BYD has also diversified, only in different avenues: it started first as a battery company, and since then expanded to EVs, energy storage, mobile components, and even monorails. BYD also has savvy management. Unlike many of its EV rivals, BYD has cash reserves that comfortably outweigh debts of ¥29.13 billion and its proprietary design lithium-ion-phosphate Blade Battery delivers superior longevity, safety, thermal resistance compared to traditional batteries – all at a lower cost and better margins. 

Although Tesla managed to open a factory in China to address the Chinese EV market, BYD has also expanded abroad, with new factories in Thailand and in Hungary. Given the recent public rift between President Trump and Elon Musk, opening the US market to BYD’s EV cars would be a sizable blow to Tesla and could likely help Boeing or other major exporters to China on a reciprocal basis in the future. 

While it trades on both the Shenzhen and Hong Kong Exchanges, BYD also lists its H shares, as well as a more expensive ADR, on the OTC Pink Sheets for US investors. 

Baidu Inc.

 

Stock: Baidu Inc. (NASDAQ: BIDU)

Industry: SEO, cloud services, e-commerce, AI, robotaxi 

Fair Value: $129.00-$145.00

Current Value: $86.44

Often referred to as “The Google of China”, Baidu Inc. is China’s go-to SEO and also has its hand in numerous other digital technology areas, including AI.  However, Baidu’s much greater equivalent market dominance and censorship capacities dwarf those of Alphabet/Google. Baidu is routinely considered to be significantly undervalued, and analysis published in Seeking Alpha, TipRanks, and Value Investing IO all believe the company has anywhere from 40% to 55% upside, based on such criteria as:

• Extremely low P/E ratio 
• Expansion in cloud computing and smart driving platforms
• AI breakthroughs.

A recent report in the South China Morning Post stated that Baidu had open sourced 10 variants of its Ernie 4.5 multimodal family, and made available on Hugging Face. Since Ernie 4.5 has already been proven superior to DeepSeek’s V3, Baidu’s monetization prospects through 3rd party AI R&D users has already caused Bank of America to increase its Baidu price target to $100.  

 

With the second largest economy in the world, China is definitely a strong economic rival of the US. Thanks to President Trump, the US has now evened the playing field somewhat, but most people would agree that a competitive economic rivalry is far preferable to a military one that could be only a step away from war. 

 

 

 

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