The consensus of 30 investors in Malaysia and Singapore Chan met recently is that valuations of stocks of China staples remained stretched but are interested in the stocks of China sportswears companies, notes Chan. WH Group’s (HK$6.80) valuation was attractive to investors, highlights Chan, as lower pork prices could lift margins in its China operations this year. On discretionary stocks, investors believe that there is room for operating margin expansion, particularly Pou Sheng (HK$2.45), which is Daiwa’s top pick, having seen significant operating margin expansion in the last three years. Investors are also aware of the impact of e-commerce on retailers, particularly sportswear distributors and department stores. Daiwa’s top picks are Uni-President China (HK$5.50) with its market share gains in the noodle and beverage segments and China Agri-Industries (HK$2.96) for its strong margin expansion as average sales price rises.

Source: The Edge Markets October 11, 2016 04:18 UTC