The Hong Kong market has recently seen a mix of cautious optimism and strategic positioning, with the Hang Seng Index gaining 2.14% amid broader concerns about economic growth and corporate earnings. This environment presents a unique opportunity for investors to explore undervalued small-cap stocks that have shown promising insider buying activity. In such conditions, identifying stocks with strong fundamentals and insider confidence can be particularly advantageous, as these factors often indicate potential resilience and growth prospects despite broader market uncertainties.
Top 10 Undervalued Small Caps With Insider Buying In Hong Kong
Overview: Shenzhen International Holdings operates in logistics, including parks, services, and ports, as well as toll roads and environmental protection, with a market cap of HK$24.06 billion.
Operations: The company's revenue primarily comes from its Toll Roads and General-Environmental Protection Business, contributing HK$9.75 billion, and Logistics Park Transformation and Upgrading Services, generating HK$5.59 billion. The gross profit margin has shown variation over the periods, with a recent value of 36.76%.
PE: 5.9x
Shenzhen International Holdings, a small-cap stock in Hong Kong, recently reported half-year sales of HK$6.61 billion and net income of HK$652.7 million, a significant increase from last year's HK$92.05 million. The company's earnings per share rose to HK$0.27 from HK$0.04 year-over-year due to successful asset transfers and reduced financial costs. Insider confidence is demonstrated by Zhengyu Liu's recent purchase of 693,000 shares valued at approximately HK$3.97 million in August 2024, indicating potential growth prospects despite the current external borrowing risks for funding operations.
Overview: K. Wah International Holdings engages primarily in property development and investment across Hong Kong and Mainland China, with a market cap of HK$10.23 billion.
Operations: K. Wah International Holdings generates revenue primarily from property development in Mainland China and Hong Kong, along with property investment. The company's gross profit margin fluctuates, reaching 38.37% as of June 30, 2024. Operating expenses and non-operating expenses significantly impact net income margins, which stood at 11.24% for the same period.
PE: 11.6x
K. Wah International Holdings, a smaller player in Hong Kong's market, has seen a dip in its recent financial performance. For the half year ending June 30, 2024, sales dropped to HK$1.21 billion from HK$3.10 billion the previous year, with net income also falling to HK$153.79 million from HK$481.91 million. Despite this downturn, insider confidence remains strong as key figures have been purchasing shares over the past few months. Earnings are forecasted to grow by 43% annually, suggesting potential future growth despite current challenges.
Overview: IGG is a company engaged in the development and operation of online games, with a market cap of HK$7.53 billion.
Operations: The company generates revenue primarily from the development and operation of online games. For the period ending June 30, 2024, it reported a gross profit margin of 77.58%. Operating expenses include significant allocations to sales & marketing (HK$2.37 billion) and R&D (HK$828.94 million).
PE: 5.2x
IGG Inc, a small cap in Hong Kong, reported H1 2024 sales at HK$2.74 billion, up from HK$2.50 billion last year, and net income of HK$330.95 million compared to a loss of HK$359.80 million previously. Basic earnings per share jumped to HK$0.29 from a loss of HK$0.31 per share last year, reflecting improved profitability and potential value for investors seeking growth opportunities in the gaming sector despite its reliance on external borrowing for funding.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include SEHK:152 SEHK:173 and SEHK:799.
