In this section we provide readers with three ASX listed stocks that have exposure to China via their operations and sales channels. There is an increasing number of Chinese companies listing on the ASX, so investors need to be careful of which companies they cast their eyes on because things can go wrong very quickly. To avoid costly mistakes we will give you three of our own recommendations with our own honest opinion. As part of the investment process awe will look at the underlying fundamentals of each business and the thematics going forward. China this, China that. We all know China is a big deal and Australia has been riding the rickshaw for quite some time. But how can investors gain exposure to China with the least amount of risk? It’s not an easy tak, especially buying Chinese shares or ASX listed ones that have this exposure. China is Australia’s biggest trading partner and is tipped to remain this way for quite some time. Trade with China accounts for more than a third of our exports. Roughly 76% of China’s urban population tipped to be considered middle class by 2022, that’s over 550 million people, the same size as the US. It means this middle class will be able to take on a lote more debt and will be a more consumption led generation that will demand clean & green food, fashionable clothes and quality products. The consumption of imported foods, organic products and haitao have gone up. Imported foods/beverages and health foods had the highest purchase rate in the past year. All this means one thing, Australian premium products such as baby milk, skin care products, alcoholic beverages and vitamins will only continue to be in high demand. With that in mind we’ve listed three ASX stocks that give investors exposure to China via the products they sell. They are: Synlait Milk (SM1), Treasury Wine Estates (TWE) and Costa Group (CGC). Synlait Milk (SM1) Is an innovative New Zealand based dairy processing company that produces a range of nutri-tional milk products that provide genuine benefits for human health and wellbeing. The company also manufac-tures infant powder which is exported around the globe. SM1 pays a premium to suppliers for milk that has specific health benefits, such as cows that have the A2 beta-casein protein or ones that are grass-fed. It uses this milk to manufacture higher margin nutritional products. Sylait’s Starter and Follow-on formulas offer a nutritionally bal-anced solution for infants up to 12 months of age and the Growing-up Milk Powders are formulated to supplement the diet of toddlers between 12 and 36 months of age. SM1 also manufactures whole milk powders, skim milk powders and Lactoferrin. This product is ideal for incorporation into nutritional products, particularly infant formula. Dairy giant a2 Milk (A2M) has a strategic 8.20% stake in SM1, further cementing the relationship between the two. SM1 and A2M signed a five-year supply agreement the goal of developing the world’s first A2 beta-casein infant formula. SM1 will produce A2M’s flagship a2 Platinum infant formula product. Following this the China Food and Drug Administration (CFDA) granted registration approval for SM1 and A2M to continue to export its infant formula to the lucrative Chinese market. Despite the brand not being well recognized in Australia, the company has a $1.5bn market capitalization and its shares have more than doubled over the last year. SM1 trades on a PE of 22.43x and is remarkably cheaper than its rivals Bellamy’s (BAL) on a PE of 53x and A2 Milk (A2M) on a PE of 47x. ROE is rising 11% to 15% and its EPS is up 64%. Overall the company is hitting milestone after milestone. Just recently it opened a R&D centre in Palmerston North in NZ, purchased 28 hectares of land in Pokeno, North Waika-to to establish their second nutritional powder manufacturing site and announced a new…

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