Goldman Sachs just added stocks to its top Asian picks, giving one over 45% upside

Published Thu, Apr 11 20247:08 PM EDT

Amala Balakrishner @in/amala-balakrishner @_amalabk

Goldman Sachs has refreshed its conviction list of top stocks in Asia Pacific this month, adding some names and removing others. The bank remains optimistic on the region, noting that it has a solid outlook this quarter. "Five factors are likely to influence Asian market performance in 2Q: the start of a rate cutting cycle, led by the Fed; elections and geopolitics; 1Q earnings results; market-specific policy; and (less fundamentally, but notably) seasonality," the investment bank's analysts wrote in an April 7 note. Looking ahead, they expect the the MSCI Asia Pacific ex-Japan index (MXAPJ) to post earnings growth of 15% and 11% in 2024 and 2025 respectively. Key trading themes on their radar include secure shareholder returns, policy-easing beneficiaries as well as opportunities among artificial intelligence and defense stocks. Here are two additions to Goldman Sachs' Asian conviction list, and two removals: China Resources Beer Goldman analyst Leaf Liu said he was positive on the outlook for Chinese beer manufacturer and distributor China Resources Beer . Brands it owns or has a stake in include Blue Sword, Green Leaves, New Three Star, Tianjin and Heineken . "Despite multiple headwinds of weak macro, consumption downgrade and the deflationary environment in China, CRB has delivered relatively resilient EPS [earnings per share] growth, driven by solid progress in premiumization," the analyst wrote. He believes the brewer's "risk/reward is increasingly attractive" and expects the company to "gain the most incremental market share amongst the peer group in the premium beer segment." Shares in China Resource Beer are down around 45% in the last 12 months. Goldman Sachs has a 12-month price target of 51 Hong Kong dollars ($6.51) on the stock, giving it potential upside of around 46%. Shares in the life insurer are traded in the KraneShares MSCI All China Index ETF (0.4% weight) and Franklin FTSE China ETF (0.3%). NTPC India's power generation company NTPC — formerly the National Thermal Power Corporation — was another addition to Goldman's conviction list. Analyst Apoorva Bahadur says the company is set to benefit both from worsening power shortages and the renewable transition more broadly. NTPC states on its website that it has an installed capacity of over 75 gigawatts, and plans to raise this to 130 gigawatts by 2032. Bahadur believes its renewable business has the potential to "re-rate, with the company benefiting from decline in module prices, progress on new energy plans and potential monetization." Shares in the power generation player are nearly 104% over the last 12 months. Goldman gives the stock a 12-month price target of 395 Indian rupees ($4.74), implying potential upside of 8.8%. Shionogi, China Medical System Meanwhile, the Wall Street bank removed two pharmaceutical players — Japan's Shionogi and the China-headquartered China Medical System — from its conviction list. — CNBC's Michael Bloom contributed to this report.