“Around half of the 5,000 companies in our [China A-shares] universe have pre-announced their annual results. Based on the bottom-up analysis underpinning our proprietary FCFF framework, we believe that fundamentals are reaching the trough, and our hopes of a recovery are rising,” Value Partners says.
Value Partners makes an interesting case for why quality China A-shares can offer upside. The two key reasons are i) undervaluation and ii) China’s value-up strategy.
Value Partners’ ‘Free Cash Flow to the Firm (FCFF) Cycle Index’s most recent reading of 2.6 is the third-lowest level in the past 20 years. The only times that the index has produced lower readings were during the global financial crisis in the fourth quarter of 2008 and at the height of the Covid-19 crisis in the first quarter of 2020.
