Barron's - "Chinese Female Buffett" Liu Yang: Sany Heavy Industry (600031) is "Caterpillar"

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Liu focuses on individual stocks that have benefited from the Chinese government's policy to encourage the expansion of domestic demand, and she frequently trades and holds heavy positions in stocks of small companies that she sees as promising to become bigger and stronger. One of her goals is to find some "extraordinary" stocks that will eventually be included in a benchmark index in China. About 60% of Xijing China's portfolio is concentrated in 20 companies.

One of Liu's favorite stocks is Sany Heavy Industry (600031), which she calls "China's Caterpillar" (Caterpillar is one of the world's 5655 construction machinery manufacturers). Sany Heavy Industry is a China*5655 manufacturer of construction, excavation, mining, and cement production machinery, as well as wind turbines. Sany is currently expanding overseas, but Liu sees its main opportunity in China. The company is currently listed on the China A-share market and plans to issue H shares.

Liu Yang is also particularly interested in China's Rongsheng Heavy Industries Group Holdings Ltd. (Rongsheng Heavy Industries, HKG:1101), a China*5655 shipbuilding company that listed in Hong Kong last year. At that time, Xijing Investment, along with CNOOC and Chinese Life (601628), was the *5655 investor in the initial public offering of Rongsheng Heavy Industries. When Yuanda China Holdings Limited (hereinafter referred to as "Yuanda China") goes public in Hong Kong this year, Xijing Investment will also buy a considerable number of shares. Yuanda China mainly produces building facades, metal roofs and skylights.

One listed company that may benefit from the Chinese government's expansion of healthcare spending is Shandong's Weigao (HKG:1066), a medical device manufacturer in China*5655. The company and Medtronic formed a joint venture. Liu Yang is convinced that the joint venture will grow twice as fast as China's GDP in the next two to three years.

One controversial option is shopping mall operator Renhe Commercial Holdings Limited (Renhe Commerce, HKG: 1387), which has been targeted by short-selling forces this year as bears anticipate that the company will take on a large amount of debt in order to expand. But Liu Yang believes that this is a potential stock. During the financial crisis, people and businesses spent 40% of their profits on paying dividends. Liu Yang also said that the stock is currently trading at a price-to-earnings ratio of only 6 times.

(This article was originally published in Barron's and has been slightly abridged)