In This Article:
As global markets show signs of resilience, the Hong Kong market has been no exception, with the Hang Seng Index up 1.99% recently despite weaker-than-expected economic activity in China. This environment presents a unique opportunity to explore stocks trading below their estimated fair value. In this article, we will highlight three such undervalued stocks on the SEHK that could potentially offer investors attractive entry points given current market conditions.
Top 10 Undervalued Stocks Based On Cash Flows In Hong Kong
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| Best Pacific International Holdings (SEHK:2111) | HK$2.19 | HK$4.36 | 49.8% |
| Bosideng International Holdings (SEHK:3998) | HK$3.95 | HK$6.76 | 41.6% |
| ANTA Sports Products (SEHK:2020) | HK$67.95 | HK$135.86 | 50% |
| BYD Electronic (International) (SEHK:285) | HK$30.10 | HK$53.34 | 43.6% |
| Shanghai INT Medical Instruments (SEHK:1501) | HK$28.55 | HK$56.11 | 49.1% |
| Pacific Textiles Holdings (SEHK:1382) | HK$1.58 | HK$2.86 | 44.7% |
| WuXi XDC Cayman (SEHK:2268) | HK$18.92 | HK$37.62 | 49.7% |
| iDreamSky Technology Holdings (SEHK:1119) | HK$2.27 | HK$4.19 | 45.9% |
| Weimob (SEHK:2013) | HK$1.31 | HK$2.25 | 41.7% |
| MicroPort CardioFlow Medtech (SEHK:2160) | HK$0.70 | HK$1.37 | 49.1% |
Let's take a closer look at a couple of our picks from the screened companies.
iDreamSky Technology Holdings
Overview: iDreamSky Technology Holdings Limited operates a digital entertainment platform that publishes games through mobile apps and websites in the People’s Republic of China, with a market cap of HK$3.80 billion.
Operations: The company's revenue segments include Game and Information Services (Incl. SaaS and Other Related Services), generating CN¥1.92 billion.
Estimated Discount To Fair Value: 45.9%
iDreamSky Technology Holdings is trading at HK$2.27, significantly below its estimated fair value of HK$4.19, indicating it is highly undervalued based on discounted cash flow analysis. Despite recent shareholder dilution from a follow-on equity offering raising HK$257.68 million, the company’s revenue is forecast to grow 29.8% per year, outpacing the Hong Kong market's average growth rate of 7.4%. Profitability is expected within three years with a high future return on equity projected at 24.8%.
IGG
Overview: IGG Inc, an investment holding company with a market cap of HK$2.85 billion, develops and operates mobile and online games across Asia, North America, Europe, and other international markets.