Broker: UOB Kay Hian
Date of Report: 4 September 2025

Top China Stock Picks for September 2025: UOB Kay Hian Reveals Conviction Calls and Market Outlook

The Greater China equity market surged to new year-to-date highs in August, driven by dovish tones from the US Fed and robust corporate performances. However, as optimism gets priced in, UOB Kay Hian’s latest strategy note signals a tactical shift: the broker is now inclined towards a more cautious stance, expecting a period of consolidation. This comprehensive analysis details their top stock picks, actionable recommendations, and in-depth company reviews for investors seeking to navigate the evolving landscape.

Market Recap & Strategic Outlook

In August, both the Hang Seng Index (HSI) and MSCI China Index advanced, fueled by confidence from Fed Chair Jerome Powell’s Jackson Hole speech. The HSI climbed 1.2% month-on-month, while the MSCI China Index jumped 4.2%. Tencent Music Entertainment led monthly returns among UOB’s picks, surging 18.6%.

Looking forward, UOB Kay Hian expects consolidation as most short-term positives have been absorbed. The strategy is now “biased to SELL” for many names, with selected BUY opportunities where robust catalysts remain.

Key Portfolio Changes & Recommendations

• New BUY Additions: Anta Sports, BYD Electronic (BYDE), CSCEC
• Initiated SELLs: Li Auto, Orient Overseas International (OOIL)
• Profit Taking: Innovent, JD Logistics, Lenovo, Sino Biopharm, Tencent, Tencent Music Entertainment
• Maintained BUYs: Alibaba, JBM Healthcare, Shuanghuan Driveline, Xiaomi Corp

Summary Table: Key Stock Recommendations

Performance Snapshot: Portfolio & Stock Returns

Valuation Table: Analyst Alpha Picks

In-Depth Company Analysis

Alibaba (9988 HK) – BUY

• Strong customer management revenue (CMR) growth, leveraging a Rmb30 trillion addressable market and robust AI-driven cloud demand.
• China e-commerce revenue up 10% YoY to Rmb140b in 1QFY26. CMR also rose 10% YoY to Rmb89.3b, supported by higher take rates and increased penetration of Quanzhantui.
• Quick commerce revenue rose 12% YoY to Rmb14.8b. Taobao app Daily Active Users grew 20%, with purchase frequency on the rise. Quick commerce is expected to add Rmb1 trillion in annualized GMV within three years.
• China commerce EBITA rose 21% YoY to Rmb38.4b, with a 5ppt margin expansion due to asset disposals (Sun Art, Intime). Cloud revenue grew 26% YoY, driven by triple-digit AI product revenue. EBITA margin remained steady at 9%.
• Invested Rmb38.6b in 1QFY26 as part of a Rmb380b three-year cloud and AI plan.
• Trading at 24x FY26F PE, which is 1SD below historical mean, with an anticipated 28% EPS CAGR through FY29.
• Target price: HK\$170.00 (29x FY26F PE).
• Share Price Catalysts: Resilient domestic consumption, cloud profitability growth, user base expansion. Timeline: 2H25.

Anta Sports (2020 HK) – BUY

• Anta brand’s 1H25 retail sales slightly missed targets; Fila retail sales were robust.
• Momentum improved in late-August 2025. Full-year Anta brand sales target lowered from high- to mid-single digit growth; Fila and other brands are expected to offset this, putting group-level sales growth in the teens for 2025.
• DCF-derived target price: HK\$114.20 (21.8x 2025F PE, 19.7x 2026F PE).
• Share Price Catalysts: Retail sales recovery, stabilizing discounts, improving margins. Timeline: 3Q25.

BYD Electronic (285 HK) – BUY

• Set to benefit from the next iPhone upgrade cycle, Apple supply chain content gains, AI server business ramp-up, and automotive growth—especially with new foreign OEM wins.
• Earnings growth expected to re-accelerate to 39.6% YoY in 2026 after slow growth in 2024-25.
• SOTP-based target price: HK\$51.80. Valuation includes 15.9x 2026F PE for automotive electronics, 14.2x for consumer electronics, and 14.3x 2025F PE for intelligent devices.
• Share Price Catalysts: Apple’s autumn event. Timeline: September 2025.

China State Construction Engineering Corporation (CSCEC, 601668 CH) – BUY

• 1H25 net profit up 3.2% YoY to Rmb30.4b. Operating cash flow (OCF) turned positive at Rmb13.2b in 2Q25, a notable improvement backed by better cash collection.
• Revenue down 3.2% YoY but offset by higher asset disposals (+18% YoY) and lower impairments (-56% YoY).
• Management targets high-quality growth, OCF improvements, steady DPS, and further asset revitalization (Rmb91.4b in 1H25).
• Attractive 4.8% FY25 dividend yield, making CSCEC a strong proxy for China’s fiscal and property stimulus.
• Target price: Rmb6.56, based on SOTP valuation.
• Share Price Catalysts: Stronger-than-expected property and fiscal policies in 2H25. Timeline: 3Q25.

JBM Healthcare (2161 HK) – BUY

• Leading branded healthcare provider with proprietary Chinese medicine products (Ho Chai Kung, Po Chai Pills, Hoi Tin CCMG).
• Effective marketing and rejuvenation of iconic brands. New campaign for Po Chai Pills (featuring Louis Koo Tin-lok) well-received online; offline campaign feedback is awaited.
• Strong cash flow, three-year EPS CAGR of 17.9% (FY26-28) projected, with a 6.9% FY26 dividend yield (70% payout).
• Target price: HK\$3.31 (11.2x FY26F PE).
• Share Price Catalysts: Positive marketing campaign reception. Timeline: 2H25.

Li Auto (2015 HK) – SELL

• Facing headwinds from weak sales and margins amid intense competition in the extended range EV (EREV) and plug-in hybrid markets.
• 2Q25 core earnings down 18% YoY; guidance for 3Q25 is 90,000-95,000 deliveries (down 41-38% YoY), with revenue of Rmb24.8b-26.2b (down 42-39% YoY).
• Disappointing response to new i8 pure electric SUV.
• Target price: HK\$70.00 (10-year DCF, WACC 14%, terminal growth 4%).
• Share Price Catalysts: Further price cuts, disappointing sales, weak 3Q25 results. Timeline: Sep-Oct 2025.

Orient Overseas International (OOIL, 0316 HK) – SELL

• Downside risks for container shipping in 2H25: cargo frontloading effects fading, tariff uncertainties, new US port charges on Chinese carriers, possible Red Sea route resumption (releasing capacity), and new vessel deliveries (capacity growth projected at 4.1-6.9% p.a. through 2027).
• 2H25 net profit forecast at HK\$573m (down 40% HoH, 67% YoY). Earnings expected to moderate further into 2026.
• Target price: HK\$115.00 (0.73x 2025F P/B, 1.5SD below historical mean).
• Share Price Catalysts: Red Sea stabilization, US port charges, US-China tensions. Timeline: 2H25.

Shuanghuan Driveline (002472 CH) – BUY

• Poised for sustained EV market growth, overseas expansion, and product upgrades through higher penetration of coaxial gearboxes and plastic smart actuators (raising content per vehicle to over Rmb1,000 for certain projects).
• Core business expected to maintain double-digit growth; well-positioned for humanoid robot demand due to leadership in the robotic planetary reducer market.
• Target price: Rmb46.10 (24.4x 2026F PE, 1.0x 2026F PEG).
• Share Price Catalysts: Humanoid robot component order wins. Timeline: Sep-Nov 2025.

Xiaomi Corp (1810 HK) – BUY

• Strong IoT device market presence (wearables, tablets, home appliances) and growing EV business, supporting an AI ecosystem advantage.
• Recent share price underperformance due to higher DDR4 prices, but cost pressures are expected to ease as DRAM producers ramp up supply.
• EV business is a future focus, with potential upside beyond current shipment assumptions (500,000 units); new launches and phase-two factory ramp-up are key catalysts.
• Target price: HK\$69.20 (SOTP: HK\$49.20 for core business at 25.0x 2026F PE, HK\$20.00 for EV business at 10-year DCF, WACC 9.6%).
• Share Price Catalysts: DRAM price moderation, new EV model launches. Timeline: Sep-Dec 2025.

Conclusion: Navigating a Changing Market

With recent gains already priced in, UOB Kay Hian recommends a selective approach, favoring companies with clear growth drivers and visible catalysts while taking profits or reducing exposure to those facing cyclical or structural headwinds. The above analysis and tables offer actionable guidance for investors seeking alpha in an evolving Greater China equity landscape.