3 China Stocks that Gained 400% or More in 5 Years

Over the past three years, Chinese stocks have exhibited poor performance, with many of them trading below their pre-Covid levels. Our objective was to identify Chinese stocks that have defied this prevailing bearish sentiment, as we believe that such stocks must possess exceptional resilience to have achieved significant increases in their stock prices.

Our focus is not on stocks that experience rapid and volatile price surges, which could be associated with speculative activities or "pump and dump" schemes. Instead, we aim to highlight stocks that have demonstrated the ability to consistently maintain strong stock performance over the last five years, encompassing the period from before Covid to the post-Covid era, as well as during the challenging three-year span of a bearish Chinese stock market.

While there were numerous stocks that met these criteria, we have chosen to spotlight three notable examples.

Cowell (SEHK:1415)

Among the three stocks discussed in this post, Cowell stands out as the top performer, delivering an impressive total return of 3,121% over the past five years.

While Cowell might not be a widely recognized company to most, it holds a crucial role as one of Apple's suppliers. Specifically, Cowell is one of three camera module manufacturers for Apple, alongside LG Innotek and Foxconn. More precisely, Cowell specializes in producing front-facing camera modules for iPhones.

Being chosen as a supplier for Apple is a prestigious and advantageous position, but it also comes with a potential risk. Currently, Apple represents Cowell's largest customer, accounting for a significant 96.5% of its revenue. Consequently, any shift by Apple to another vendor could have a substantial impact on Cowell's financial stability.

A pertinent example is the case of Ofilm, which used to be a camera module supplier for Apple but was blacklisted by the US in 2020, leading to Apple discontinuing its partnership with the company. However, Ofilm managed to secure Huawei as a major customer and contributed to the success of Huawei's Mate 60 series. Similarly, Apple's decision to drop Sharp from its iPhone 16 supply chain was driven by concerns about product quality.

Nonetheless, Cowell's position as an Apple supplier is relatively secure for the time being. Despite strained relations between the US and China, Apple has faced pressure to maintain a significant portion of its production in China. Apple's CEO, Tim Cook, even recently visited China to reaffirm the company's commitment, especially after China imposed stricter app store approval rules and initiated investigations into Foxconn.

Cowell's management also recognizes opportunities in the market, including providing optical components for AR/VR goggles and contributing to the development of LiDAR technology for autonomous driving.