The trust aims to provide investors with access to a wide range of opportunities in China, leveraging the unique advantages of its structure, such as the ability to use gearing, invest in private companies, and employ derivatives. I look for firms with scalable growth potential, strong returns on capital based on a clear competitive advantage and strong management.
These often align with secular growth trends, but I pay close attention to cyclicality, as it can also present opportunities. I prioritise management teams with a proven record of strong execution and favour under-researched small- and mid-cap stocks capable of outperforming the market.
Where to invest in China
One company I have invested in is Medlive Technology (Hong Kong: 2192). It operates a leading online platform connecting pharmaceutical and medical device companies with doctors, providing medical information, clinical guidelines, and diagnostic tools.
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Its core strength lies in digital healthcare marketing, and it is benefiting from the ongoing shift of healthcare budgets from offline to online channels. Medlive has demonstrated robust growth, with its client base and the number of products promoted rising significantly.
Despite recent anti-corruption crackdowns, the long-term outlook for drug and medical device development in China remains strong, driven by a shift from sales and promotion to increased investment in research and development.
As more new drugs are developed, pharmaceutical companies will require enhanced marketing support. Medlive, with its focus on precision digital marketing, is well-placed to benefit from this transition. With limited competition and ample reinvestment opportunities, Medlive remains a compelling long-term growth story.
Ping An Insurance (Hong Kong: 2318) is one of China’s leading financial services providers, offering a wide range of insurance and investment products. China’s insurance sector remains underpenetrated compared with Western markets, presenting strong long-term growth potential.
Ping An is well positioned to capitalise on this, benefiting from robust demand in life insurance, particularly in elder care and critical illness coverage. It is gaining efficiency through investment in technology and bolstering risk control through better asset-liability management, tighter underwriting standards and improving the sales force’s skills. Meanwhile, the stock is attractively valued at a discount to book value, with strong capital return policies delivering an appealing dividend yield.
Tuhu Car (Hong Kong: 9690) is China’s leading car services provider, leveraging digitalisation to transform customers’ experiences, standardise services, and drive efficiency. The company’s platform integrates booking, parts ordering, service tracking, and technical support, creating a highly scalable, capital-light model.
In a fragmented market dominated by small local players, Tuhu has consolidated its position as the largest player, with over 4,000 franchised stores. China’s ageing car fleet is fuelling demand for maintenance, and Tuhu’s scale – it is one of the world’s largest purchasers of tyres – gives it significant pricing power.
The group also has substantial scope for expanding its margins through private-label products, increasing offline traffic, and enhancing high-value chassis services. The trust first invested in Tuhu as a private company, so I’ve known it for a long time. With few direct rivals and a proven growth strategy, it still stands out as an attractive long-term investment.
This article was first published in MoneyWeek’s magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.