21. December 2020 | 08:00 CET
Samsung Electronics, AdTiger, Tencent: Investing in Asian Tigers
Asia has long been the engine of the global economy. This became most apparent in the summer when pictures of people celebrating without masks made the rounds in Wuhan. At the same time, here in Germany, the restrictions of the pandemic were still being felt. The differences are also evident at the moment: while the hard lockdown prevails in Germany, business life in Asia continues - only partially interrupted by restrictions. When looking at promising companies, Asian stocks are increasingly appearing on the buy lists of professional investors. Why? Many Asian companies are technologically far ahead and close to fast-growing future markets. Nowhere else in the world is the middle class growing faster than in Asia. Reason enough to take a close look at stocks from the region.
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ISIN: KYG009701064 , KYG875721634 , US7960502018
"[...] We recognized that there is a lack of business models that combine innovative business concepts, such as "new retail" solutions and omni-channel strategies, with conventional business segments. [...]" Fan Xian Yong, CEO, The Place Holdings
Samsung as a value pearl
Samsung Electronics from South Korea is one of the global players: Above all, the Company's smartphones and tablets are selling like hot cakes worldwide. Other consumer electronics and the chips they contain also come from Samsung. As an additional pillar, Samsung is also strong in the areas of battery production and mobile payment. As with many other conglomerates, Samsung's valuation is relatively low. Especially given the recent value focus of many investors, the stock could be promising. Also, Samsung currently offers a dividend yield of more than 2%.
Over the past twelve months, the stock has posted a return of around 50%. In the past three months alone, it has risen by almost 40%. These figures show that the share is picking up speed and that the time could be favourable for an entry. However, after breaking out to a new all-time high in mid-October, the stock could come back a bit. Given the diverse industries in which Samsung operates, all of which have a future, the stock is attractive.
AdTiger: The online marketer for China
Much more specialized than Samsung is the online marketer AdTiger from Hong Kong. The Company places advertising on websites such as Facebook, Google, Twitter, Snapchat or even TikTok. AdTiger uses its algorithm to balance outreach with precision. The Company is a relevant player on the Chinese market and is, among other things, Facebook's China Export Partner and acquired the most advertising space there in the Middle Kingdom in 2019.
Valued at around EUR 80 million, the Company had cash of EUR 26.75 million at mid-year. In the first half of the year, AdTiger made a gross profit of just under EUR 5 million. Given the high cash reserves and the profitable business in an important future market, the stock may be considered moderately valued. Although the stock is actively traded in Hong Kong, it is still considered an insider tip in Germany.
Tencent: The Internet giant and its boring stock
Tencent is anything but an insider tip. China's largest Internet group offers messaging, social networks, classic websites, online advertising and other services related to entertainment on the Net. The net giant from Shenzhen is considered to be the most powerful Chinese export, but its share price is downright modest over the course of a year: The share price rose by just 43%. Over a three-year period, the price return is hardly higher.
The example of Tencent shows that the big names are often not responsible for the most significant returns. The share, which was first listed in Hong Kong in 2004, generated the most significant returns in its early years. Between 2008 and 2014, the value increased from EUR 3.90 to more than EUR 50. Although Tencent is making big profits today and has a wide range of products, investors profited during a market phase when Tencent's unique market position was at best a dream of the future.