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The Hong Kong market has recently experienced a decline, with the Hang Seng Index retreating by 2.28% amid concerns over the economic outlook and unexpected rate cuts by the central bank. Despite this downturn, opportunities may exist for investors seeking stocks that could be trading below their fair value estimates. In such an environment, identifying undervalued stocks involves looking at companies with strong fundamentals that might be temporarily overlooked due to broader market conditions.
Top 10 Undervalued Stocks Based On Cash Flows In Hong Kong
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| Giant Biogene Holding (SEHK:2367) | HK$38.50 | HK$76.16 | 49.5% |
| COSCO SHIPPING Energy Transportation (SEHK:1138) | HK$8.88 | HK$16.25 | 45.4% |
| Beauty Farm Medical and Health Industry (SEHK:2373) | HK$17.10 | HK$32.96 | 48.1% |
| Bairong (SEHK:6608) | HK$8.79 | HK$15.63 | 43.7% |
| Mobvista (SEHK:1860) | HK$1.90 | HK$3.69 | 48.6% |
| AK Medical Holdings (SEHK:1789) | HK$4.23 | HK$8.05 | 47.5% |
| Q Technology (Group) (SEHK:1478) | HK$4.22 | HK$8.28 | 49% |
| MicroPort Scientific (SEHK:853) | HK$4.95 | HK$9.41 | 47.4% |
| Vobile Group (SEHK:3738) | HK$1.24 | HK$2.31 | 46.4% |
| Chervon Holdings (SEHK:2285) | HK$16.68 | HK$30.31 | 45% |
Let's review some notable picks from our screened stocks.
BYD Electronic (International)
Overview: BYD Electronic (International) Company Limited, with a market cap of HK$66.81 billion, focuses on designing, manufacturing, assembling, and selling mobile handset components and modules both in the People’s Republic of China and internationally.
Operations: The company's revenue primarily comes from the manufacture, assembly, and sale of mobile handset components and modules, generating CN¥129.96 billion.
Estimated Discount To Fair Value: 37.1%
BYD Electronic (International) is trading at HK$29.65, significantly below its estimated fair value of HK$47.14, indicating it is undervalued based on cash flows. Earnings grew by 117.6% over the past year and are forecast to grow 22.3% annually, outpacing the Hong Kong market's growth rate of 11.3%. Recent inclusion in the Hang Seng Index and a dividend increase further bolster its investment appeal despite low forecasted return on equity (19%).
Wasion Holdings
Overview: Wasion Holdings Limited is an investment holding company that focuses on the research, development, production, and sale of energy metering and energy efficiency management solutions for energy supply industries across various regions including China, Africa, the United States, Europe, and Asia; it has a market cap of approximately HK$6.23 billion.