When China said it would ease its dynamic zero Covid policy, Chinese tech stocks soared. Alibaba (BABA) bottomed at $58.01 in Oct. and peaked at around $85.
Baidu (BIDU), a search engine and autonomous vehicle software developer, rose from below $80 to over $100. Futu Holdings (FUTU) bottomed at below $30 to peak at over $55.
Which of those three stocks is a good deal? Investors should not use the forward price-to-earnings as a guide. BIDU and BABA stock trade at a 1.5x and 1.3x forward P/E, respectively. Futu trades at a 2.3x forward P/E. The capital markets firm has the best prospects.
Futu posted an 11.5% Y/Y revenue growth in the third quarter, to $247.9 million. Despite a decline in total client assets, it offset the slowdown with growth in users. Futu trades at twice the forward valuation of Baidu and Alibaba. It has strong prospects in the stock trading space. Conversely, Alibaba continues to pay record fines to the Chinese government.
Alibaba’s fintech unit, Ant Group, is reportedly paying a fine of more than $1 billion. Per Reuters, it will pay a fine that marks an end to a regulatory overhaul in the financial technology space. China clamped down on the industry more than two years ago.
While readers should watch all three stocks, Futu has the brightest prospects.