Four top bets on Asia’s growth
Sea (NYSE: SE) is the leading e-commerce and fintech player in Southeast Asia and the second player in Latin America. It recently exited India but will return later this year. The stock has collapsed on worries over profitability in the company’s gaming business and lack of profits in e-commerce. However, the Southeast Asian e-commerce business will turn profitable this year and the gaming business will prove much more resilient. Valuations are now close to the depressed levels of Chinese tech stocks, even though it remains the region’s best hope for a $1trn market-cap company.
State Bank of India (NYSE: SBI) is the largest bank in India. It was mired in bad debts and political intervention but Modi has severed those ties, and SBI is now a leading beneficiary of the improved economic fundamentals. The bank has the largest fintech app and the largest credit card business in the country. The valuation remains at base camp on eight times forecast 2023 earnings and a price/book (p/b) ratio of 1.5, despite a return on equity (ROE) of 17% and rising fast. Private sector equivalents trade on a p/b of three with similar ROEs.
Baidu (New York: BIDU, Hong Kong: 9888) is China’s version of Google. It has a search business that trades on six times earnings, with 30% of the market cap in cash. You effectively pay nothing for China’s leading artificial intelligence and smart car businesses, and the third largest cloud computing business in the country. It also has China’s leading robotaxi business and this will break even in the next year. Baidu therefore looks set to drive China’s efforts to lead the world in autonomous vehicles. Deep value at its growthiest!
Vietnam Enterprise Investments (LSE: VEIL) is the largest UK-listed Vietnam trust and has performed better than the main Vietnamese index over the past three years. It has concentrated positions in banks, property and retail. The banking sector in Vietnam remains a key winner, with the added benefit that Vietnam has a creditgrowth quota each year and so a credit bust is extremely unlikely.