Oct 7, 2026 · 30 min
China’s battered internet stocks test the value-investing case
Unloved Chinese Stocks - Value, Buy for 2X
The episode examines whether deep investor pessimism around Chinese internet companies reflects opportunity or demands more caution.
- 1The China Internet ETF’s long-term underperformance has made pessimism a central part of the investment case.
- 2Unloved Chinese stocks may offer substantial upside, but only investors willing to analyze them carefully and wait patiently.
- 3Pinduoduo, Tencent, and Alibaba illustrate the broad Chinese internet landscape under consideration by value investors.
Don't miss
Sven Carlin turns the China Internet ETF’s weak long-term performance into the episode’s key value-investing question: warning sign or opportunity?
The brief
Sven Carlin opens with China investing and a striking question: does the China Internet ETF’s long-term underperformance signal structural risk or neglected value?
The episode treats widespread pessimism as an investment variable, not a conclusion, asking whether unloved Chinese stocks can deliver significant upside from depressed expectations.
Pinduoduo, Tencent, and Alibaba place the discussion in the real Chinese internet market, where company-specific analysis matters more than a broad bullish or bearish label.
The central discipline is patience: potential value in China does not remove the need for careful analysis, a long-term horizon, or tolerance for investor doubt.
What was said on this episode
27 statements · 18 positive · 6 negative · 2 mixed · 1 neutral
Tencent, JD.com, and Alibaba are strong global companies.
“when you look at these companies, the Tencents, the JDs, the Alibabas, those are global companies. Strong companies”
Listen at 0:46
Leading Chinese internet stocks exhibit value characteristics.
“low P ratios, high cash flows, profitable, still growing, it screams value”
Listen at 1:12
Tencent combines shareholder distributions, double-digit growth, and a 15 P/E ratio.
“A dividend, buybacks, still growing, double digits, P-ratio 15. And Tencent is actually Zach's wet dream.”
Listen at 3:48
Tencent may be worth buying during market pessimism and selling during exuberant peaks.
“At that price, now low. perhaps waiting for those peaks that arrive every few years the market gets exuberant that is the time to sell and when the market is in a bad mood that might be the time to buy”
Listen at 4:09
Alibaba is currently too expensive for Sven Carlin.
“Alibaba, too high now for me, given the situation.”
Listen at 5:22
PDD Holdings is cheap, cash-rich, and likely able to build its new business.
“But the company is cheap. There is a lot of cash. They will likely be able to build it.”
Listen at 5:53
PDD Holdings has potentially significant hidden future value if its investments succeed.
“This might be an interesting solution, but it is more of that hidden potential future value there.”
Listen at 6:03
Meituan’s profitable growth remains uncertain because of intense competition.
“Interesting, but there is a big if on the profitable growth.”
Listen at 7:19
Lenovo’s loss resulted from warrants issued to fund AI investment.
“The loss here is because of the warrants they issued to invest in AI a year and something ago.”
Listen at 8:49
AI investments face competition, so Sven Carlin waits for a downturn before investing.
“as soon as i see ai i know competition i'm waiting for a downturn not to invest in the exuberant part of it”
Listen at 9:10
Beike lacks sufficient upside at its current valuation.
“I don't see it with this company.”
Listen at 9:49
JD.com offers buybacks, a 3.7% annual yield, and growing dividends.
“JDcom buybacks, 3.7% annual yield, growing dividend yield. We discussed this. I own this for the record.”
Listen at 9:52
JD.com has a basis for future growth through logistics and its competitive moat.
“So they have something to bank on the growth and the future of the company.”
Listen at 10:45
Trip.com has a monopoly in online travel agency services.
“It has a monopoly.”
Listen at 11:25
Trip.com trades at 10 P/E while growing and may offer upside.
“Therefore, the stock is trading at the P ratio of 10, still growing. Therefore, target analysts are also seeing it higher. It might be interesting.”
Listen at 11:57
Baidu’s valuation approximates buying its cash at book value plus AI-related upside options.
“So you're practically buying cash at book value, plus on top all the bets that might work.”
Listen at 14:34
Full Truck Alliance has a good balance sheet and appears fairly or cheaply priced.
“Good balance sheet. We could say fair and cheaply priced.”
Listen at 17:12
New Oriental has returned to profitability and growth at a seven P/E ratio.
“everything looks good, P ratio of seven.”
Listen at 18:25
Sven Carlin prefers the top 15 companies in the China Internet ETF.
“I like the top 15.”
Listen at 20:12
Global investors should buy large Chinese companies cheaply and sell during exuberance.
“for us global investors, I think perhaps the best approach to China, the less risky, is when it's really cheap, when the big companies are really cheap, dip when there is exuberance, out, risk management, rinse and repeat.”
Listen at 20:33
Investors should add to the China Internet ETF when it falls and sell after recovery.
“If it goes lower, you double down. And then when it comes again back, you sell it.”
Listen at 21:22
Chinese internet investments could return at least 50% within three years.
“It's possible to make 50%. That's a minimal target in three years.”
Listen at 21:41
China poses very little risk to the variable interest entity structure.
“Very little risk of something happening there on the Chinese side.”
Listen at 24:30
Sven Carlin will not invest in Chinese companies for U.S. investors because sanctions and illiquidity are too risky.
“I will not invest in Chinese companies for that investors. Too risky to get sanctioned, to get illiquid.”
Listen at 26:18
Western investor pessimism toward Chinese ETFs creates an opportunity to investigate them.
“And because the market went from uninvestable to redemption, now down again. And when the West is fed up with the Chinese ETFs, ad years, things like that, that's the time to look at it.”
Listen at 27:28
Sven Carlin’s JD.com and Prosus holdings already comprise 10% of his portfolio.
“I own jd process that's already 10 of the portfolio and now i'm thinking should i go to 20 maybe too much now”
Listen at 28:13
Chinese investments need substantially lower prices to offer attractive returns relative to alternatives.
“China needs to be much cheaper for hitting the better side of things.”
Listen at 29:09
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.