Are the 3 Newest SDRs Xiaomi, Meituan and Ping An Insurance Good Buys?

🌟🌟🌟On March 5, 3 new Hong Kong SDRs were introduced - Xiaomi, Meituan and Ping An Insurance, joining the 5 existing Hong Kong SDRs that are available for trading on the Singapore Stock Exchange.

Are the 3 Newest Hong Kong SDRs good buys?  Let's check out them out.

XIAOMI

Xiaomi $XIAOMI-W(01810)$  $Xiaomi HK SDR 2to1(HXXD.SI)$ is the 3rd largest smartphone manufacturer in the world.  On Tuesday Xiaomi said that it has raised USD 5.5 billion in an upsized share sale as the company pushes forward with its EV manufacturing plans.

Xiaomi sold 800 million shares at HKD 53.25 per share according to a statement it made to the Hong Kong Stock Exchange.  Since then Xiaomi has dropped by 7.4% in the past 5 days.  However Xiaomi is still up 50.1% year todate.  In 2024, Xiaomi has skyrocketed by 213%, making it one of the best performing Chinese stocks.

Xiaomi said that the money raised would be used to fund the acceleration of its business expansion, research and technology development.

Xiaomi started manufacturing EVs in March last year with the launch of its SU7 sedan in addition to its smartphones, household appliances and smart gadgets. 

Xiaomi's SU7 is very popular and has brought in RMB 16.3 billion (USD 2.25 billion) in revenue in Q4 24.  That is 71.5%  increase from RMB 9.5 billion in Q3 24.  In Q4 24, Xiaomi's innovative business including EVs generated revenue of RMB 16.7 billion, including RMB 300 million from other businesses.  Xiaomi reported a gross margin of 20.4% for the quarter, up 17.1% compared to Q3 24.

In the latest earnings report Xiaomi said that it will expand its vehicle production capacity and aims to deliver 350,000 vehicles from 300,000 in 2025.

Xiaomi achieved a significant milestone in 2024 with both annual revenue and net profit reaching new historical highs.

Total revenue increased by 35% year on year to RMB 365.9 billion, while adjusted net profit rose by 41% to RMB 27.2 billion.

Xiaomi's smartphone shipments increased by more than 15% year on year, maintaining its position among the top 3 global manufacturers for 18 consecutive quarters.

The IoT business continues to grow with Gross Profit Margin increasing by 3.8% to 20.3%.

Xiaomi's R&D investment in 2024 was RMB 24.1 billion with plans to increase it to RMB 30 billion in 2025.  This shows Xiaomi's commitment to technological innovation.  Xiaomi is investing heavily into AI with a focus on integrating AI into its products over the next 2 to 3 years. 

Wall Street Analysts are bullish on Xiaomi, with a Buy rating, Average Target price of HKD 63.05, an upside potential of 23%.

Xiaomi is currently trading at a 2 to 1 ratio in Singapore.  That means every 2 Xiaomi SDRs represents 1 share of Xiaomi stock listed in Hong Kong.

MEITUAN

Meituan $MEITUAN-W(03690)$ (HMTD) is the biggest online food delivery platform in China, allowing users to order meals from various restaurants and have them delivered. 

Meitian's platform also facilitates travel bookings including hotels, tickets for movies and attractions and other entertainment services.  Meituan offers a variety of other local services, such as car hailing, bike sharing and on demand delivery of goods. 

In addition to cross selling and product diversification, Meituan's success can be attributed to its focus on operational efficiency, technological innovation and its ability to adapt to market demands. 

Meituan has just released an excellent Q4 24 and Full Year report on March 25.  For the full year of 2024, Meituan's revenues have increased by 22% to RMB 337.6 billion from RMB 276.7 billion in 2023.  Total operating profit increased by a massive 143.6% from RMB 18.5 billion in 2023 to RMB 45.1 billion in 2024.

Meituan's total operating margin increased by 6.7% to 13.4% on a year to year basis.   Meituan's Core local commerce segment achieved an operating profit of RMB 52.4 billion in 2024, an increase of 35.4% from RMB 38.7 billion in 2023.

Meanwhile, the operating loss for Meituan's New initiatives segment narrowed to RMB 7.3 billion in 2024 from RMB 20.2 billion in 2023.

Profit for the year was RMB 35.8 billion in 2024, a huge  increase of 158.4% year on year growth.  Adjusted EBITDA and adjusted net profit increased to RMB 49.1 billion and RMB 43.8 billion respectively. 

Meituan also achieved an operating cash inflow of RMB 57.1 billion in 2024.  Cash and cash equivalents were RMB 70.8 billion and short term Treasury investments of RMB 97.4 billion as of December 31 2024.

Revenue for the Core local commerce segment increased by 20.9% year over year to RMB 250.2 billion. This was due to further online penetration and strong consumer demand.  Operating profit increased by 35.4% year over year to RMB 52.4 billion.  Operating margin improved to 20.9%, up from 18.7% in 2023.  This was due to high quality growth and efficiency improvement across all businesses. 

2024 was an important year for Meituan in adapting to evolving consumption trends and propelling industry transformation.  Meituan remains committed to advancing the digital transformation of the industry.  Meituan will expand its investments in cutting edge technologies such as AI, unmanned aerial delivery and autonomous delivery vehicles. 

Meituan SDR trades at 5 to 1 ratio which means for every 5 units of SDR is equivalent to 1 Meituan Hong Kong share. 

Performance wise Meituan is down 2% in the past 5 days, but up 6.3% year to date.  In 2024, Meituan has risen by 57%.

Wall Street Analysts are bullish on Meituan with a Buy rating, Average Target price of HKD 205.49 according to Tipranks, an upside potential of 28%.

PING AN INSURANCE 

Ping An Insurance $PING AN(02318)$  is an integrated financial, healthcare and eldercare service provider in China.  Ping An Insurance started off in 1988 as a property and casualty insurance company.  However it later diversified into various financial services including insurance, banking, asset management, healthcare, leveraging technology to create ecosystems in these areas. 

Ping An is the largest insurer in China and  ranked as the 5th largest insurer in the world.  

Ping An has recently announced its financial results for the year ended December 31 2024 on March 19.  Operating profit increased 9.1% year on year to RMB 121,862 million and net profit rose 47.8% year on year to RMB 126,607 million in 2024.  Revenue was RMB 1,141,346 million, up 10.6% year on year.

Ping An plans to pay a final dividend of RMB 1.62 per share in cash for 2024.  The full year cash dividend will be RMB 2.55 per share, up 5% year on year.  The cash dividend payout ratio based on operating profit will be 37.9%, with total dividends increasing for 13 consecutive years. The current dividend yield is 5.8%.

The number of Ping An's retail customers was 242 million as of December 31 2024, up 4.7% from the beginning of 2024. 25.6% of them held 4 or more contracts with the Group, with a high retention rate of 98%.  Nearly 63% of Ping An's retail customers  contributed about 70 % of Ping An Life's NBV. 

Ping An has built  Core Competitive Moat through their Integrated Finance Model which helps Ping An maintain their position as a market leader in their field. 

Performance wise, Ping An is down 1.5% in the past 5 days but up 6.2% year todate.  Ping An has risen 38.5% in 2024.

Wall Street Analysts are bullish on Ping An with a Buy rating, Average Target price of HKD 65.93, an upside potential of 38%.

Ping An SDR $Ping An Ins HK SDR2to1(HPAD.SI)$  is trading at a ratio of 2 to 1.  This means that for every 2 shares is equivalent to 1 Hong Kong Ping An share. 

SUMMARY

Xiaomi, Meituan and Ping An are all market leaders in their respective businesses.  They tick the core fundamentals of a quality stock in terms of profitability, strong balance sheet and excellent management team. 

As a small investor, buying the SDRs of these excellent companies is a lot cheaper than buying direct from the Hong Kong Stock Exchange. The minimum lots for these SDRs in Singapore is 100 while in Hong Kong it is much more.  Take for example Ping An Insurance - the minimum lot size of the Hong Kong Stock is 500 units compared to 100 units in Singapore. 

Moreover all these Hong Kong SDRs are denominated in Singapore Dollars, saving me the expense of foreign exchange.  I also get to receive my dividends in Singapore dollars.  

I believe that Xiaomi, Meituan and Ping An are great companies with lots of exponential growth ahead.   I am so excited that I can finally invest in them through their SDRs in Singapore.  Since the launch of the Hong Kong SDRs in Singapore, the daily average value of the SDRs traded on the SGX has increased 8 times to SGD 4 million in February.   That means there are higher trading volumes in the stock exchange, making it easier for investors to trade. 

The Chinese authorities are also implementing plans to boost economic growth, increase consumer consumption.    This will certainly benefit Xiaomi, Meituan and Ping An Insurance. 

In the short term I expect some volatility in the markets due to the Trump Trade Tariffs and inflation concerns.  However with a long term horizon, Xiaomi, Meituan and Ping An Insurance will appreciate in value due to the magic of compounding. 

Investing requires patience and time in the market.   It is a marathon, not a sprint. 

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