Goldman Sachs Identifies Chinese Healthcare Stocks as Promising Post-AI Investment Opportunities

According to a recent report by Goldman Sachs, Chinese corporate earnings are surging, providing insights into sectors with potential for untapped returns. In the second quarter, nearly half of the MSCI China index constituents exceeded earnings estimates, with information technology and healthcare stocks leading the way. The firm’s portfolio strategy research team noted that earnings for Chinese stocks tracked by Goldman Sachs grew at their fastest quarterly rate in five years, reaching 24% year-on-year in the second quarter, up from just 6% in the first quarter. While artificial intelligence-related names have driven much of this growth globally, Goldman analysts caution that as AI stocks become increasingly crowded, investors are seeking opportunities beyond the AI hardware and semiconductor ecosystem.

Analysis of earnings call transcripts from over 1,500 Chinese companies revealed that discussions have expanded to downstream sectors, including data center operators, AI models, automobiles, and healthcare. To identify potential winners, Goldman screened its buy-rated coverage for Chinese companies with projected annual earnings growth exceeding 15% through 2027 and a median 7% increase in earnings per share estimates over the past month. The screen prioritized stocks where Goldman’s estimates surpassed consensus, suggesting potential upward revisions. Healthcare, especially pharmaceuticals, featured prominently, with one-third of the 12 selected companies in this sector.

The highlighted stocks include Suzhou-based Innovent Biologics, whose earnings are expected to more than double, with Goldman’s consensus 54 percentage points above the market average. BeOne Medicines, listed in Shanghai, Nasdaq, and Hong Kong, also faces doubled earnings growth, focusing on cancer treatments. CSPC, a Hong Kong-listed company with major businesses in nervous system and cardiovascular drugs, is projected to grow earnings by 26%. Hansoh Pharma, also Hong Kong-listed, expects 15% growth, with products covering metabolic and cancer treatments. If these forecasts materialize, their growth would outpace Goldman’s conservative 8% expectation for the broader MSCI China index, compared to the consensus forecast of 17%.

— CNBC’s Michael Bloom contributed to this report.

Source link