Against the backdrop of Sino-US trade war, developing Chinese domestic demand is a feasible strategy to balance China’s economic development. Among the consumer stocks, Mengniu Diary (2319.HK) & Ali Health (241.HK) are 2 strong domestic brands, which are favoured by many investors.
#1 Hengan International Group Company Limited (1044.HK)
Hengan is a leading manufacturer of daily care products in China. The company produces and sells paper products, such as paper towels, and women’s care products, such as sanitary napkins. Within the sanitary napkins space, there is a move towards higher quality products. Hengan has introduced more premium products which aim to improve users’ comfort. The stock is currently trading at a P/E ratio of around 15 times, below its historical levels which were usually above 20 times. Its dividend yield is also close to 5%, a respectable achievement for a company still in a growing phase.
With domestic consumption rising, Hengan is poised to benefit from increased spending on napkins, paper, and other essentials. Hengan has three major divisions: sanitary napkin products, disposable diaper products, and tissue paper products.
The group has grown from strength to strength over the years, releasing new products within each major division every year. The group has established more than 40 manufacturing facilities in 15 provinces, and these are underpinned by a robust nationwide sales network that involves more than 3,000 distributors.
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#2 Alibaba Health Information Technology (241.HK)
Alibaba Health Information Technology is partly owned by Alibaba Group. The company is one of China’s largest online pharmaceutical platforms with more than 130 million annual active consumers.
For the year ended March 2019, the platform had gross merchandise volume of RMB 59.5 billion. Besides, sales from the company’s pharmaceutical e-commerce platform business almost quadrupled to RMB 690 million. The company has recently invested more in AI and hopes to launch more AI powered medical services in the future.