Bernstein names its top 14 Asia-Pacific stock picks for the next six months

Published Mon, Dec 27 20216:36 PM EST

Investment firm Bernstein picked 14 stocks across seven sectors in Asia-Pacific it believes are "particularly attractive" right now. Bernstein analysts laid out two reasons why these stocks – its top picks for the next six months – are attractive. First, these are companies the analysts have a "strong positive view" on. And second, they are "highly ranked" from a quantitative strategy point of view, the firm said. A quantitative trading strategy relies on mathematical computations and number crunching to identify trading opportunities. Quantitative-based investing now accounts for the largest portion of daily stock trading. These are the 14 stocks that Bernstein is bullish on and why it finds each one attractive. 1. JD.com Chinese e-commerce giant JD.com was one of the standout performers in 2021, during a challenging period for the internet sector, Bernstein said. It likes the firm's logistics arm, and it's one of the firm's top long-term picks in the sector. 2. Midea Group Midea Group , a Chinese electrical appliance manufacturer, has "strong brand equity, solid balance sheet and cash position, consistent [earnings-per-share] growth and a reliable dividend payout," said Bernstein. Midea also has a strong online business and high overseas exposure, it says. 3. ICBC Bernstein said concerns over asset quality and systemic risks among Chinese state-owned banks are "overdone." "The Chinese [state-owned] banks are dirt cheap and unloved … and [they] are now trading at steep discounts vs history," said Bernstein. However, it believes ICBC continues to be "a compelling value case that has been overly discounted" while its double-digit return-on-equity still looks healthy. 4. CNOOC Bernstein said Chinese oil and gas firm CNOOC's stock has been "punished" by U.S. sanctions preventing American investors from trading the stock. However, the firm said it doesn't believe "it will have a meaningful impact on operational performance." It said CNOOC has one of the best dividends, balance sheets and growth outlooks. 5. ZTO Express Chinese logistics firm ZTO Express is Bernstein's top pick in the country's mass e-commerce express delivery sector, saying the company could ship as much as 21% of express delivery parcels in China by the end of 2021. "The China express market is consolidating ... We expect the market to lose more weaker players and ZTO will benefit in the long run as competitors struggle during integration," Bernstein analysts wrote. 6. Prada Chinese President Xi Jinping's comments on a "common prosperity" drive earlier this year prompted a "sharp (but short-lived) downward reset for the luxury goods sector," said Bernstein. It said Chinese luxury demand "hasn't wobbled" in the third quarter. And in fact, Bernstein says Prada is "capitalizing many good decisions of recent times," namely: product and marketing innovation, new creative impetus, renewed digital efforts and improved operations. 7. Xinjiang Goldwind Science & Technology Bernstein said Chinese wind turbine manufacturer Goldwind stands out for its attractive dividend yields, with its "robust" earnings growth this year. "For a company that benefits directly from the secular decarbonization trend, Goldwind's current valuation remains undemanding," Bernstein analysts wrote. 8. Sinopec Chinese oil and gas company Sinopec "appears undervalued," said Bernstein. "With no net debt and 10% dividend yield, there is much to like for value investors," Bernstein analysts wrote. 9. Siam Commercial Bank Bernstein said Siam Commercial Bank is the best "reopening trade" as Thailand looks to resume tourism. The firm said the bank has potential to outperform its peers on cost, credit costs and capital. 10. Tokyo Electron Japanese electronics firm Tokyo Electron will benefit from the growing water fabrication equipment market as it gains market share and profitability increases, Bernstein said. 11. Asahi Japanese brewery Asahi is better poised than its competitors to benefit from economies reopening, according to Bernstein. The firm noted the stock is trading at a roughly 40% discount to other brewers globally. 12. Inpex Japanese oil company Inpex continues to trade at a "wide valuation discount" as compared with its Australian liquid natural gas peers, said Bernstein. The company announced a share buyback last quarter, which the firm noted could signal a more shareholder-friendly approach from management, possibly driving further gains. 13. Novatek Microelectronics Taiwan's Novatek Microelectronics , which produces integrated circuits for use in electronics such as TV panels, has been closely tying up with Chinese panel makers, according to Bernstein. That "positions Novatek squarely to benefit" from the continued market-share shift from Korean to Chinese suppliers in both LCD and OLED panels, said Bernstein. 14. Cochlear Australian medical implant company Cochlear enjoys a dominant position in the market with its 50% share, Bernstein said. That scale has enabled the firm to push into new markets, the firm said. It forecasts a 10% compound annual growth rate for Cochlear through end of 2024.

JD.com's booth at the China Joy gaming conference in Shanghai on July 30, 2021. The Chinese e-commerce giant is investing heavily in gaming.

Arjun Kharpal | CNBC

Investment firm Bernstein picked 14 stocks across seven sectors in Asia-Pacific it believes are "particularly attractive" right now.