In August 2024, the Hong Kong market has shown resilience amidst global economic fluctuations, with the Hang Seng Index gaining 1.99% despite weaker-than-expected economic activity in China. This environment presents a unique opportunity to explore undervalued small-cap stocks that have seen insider action, indicating potential confidence from those closest to the companies. Identifying promising small-cap stocks often involves looking at insider buying trends, which can signal that those with intimate knowledge of the company believe in its future prospects.
Top 10 Undervalued Small Caps With Insider Buying In Hong Kong
Overview: K. Wah International Holdings is engaged in property development and investment, with operations in Hong Kong and Mainland China, and has a market cap of HK$10.84 billion.
Operations: K. Wah International Holdings generates revenue primarily from property development in Mainland China and Hong Kong, with additional income from property investments. For the period ending December 31, 2023, the company reported revenue of HK$6.10 billion and a gross profit margin of 33.07%. The cost of goods sold (COGS) amounted to HK$4.08 billion, while operating expenses were HK$826.68 million and non-operating expenses were HK$389.33 million.
PE: 7.1x
K. Wah International Holdings, a small cap in Hong Kong, reported half-year sales of HK$1.21 billion and net income of HK$153.79 million, both down significantly from last year. Basic earnings per share dropped to HK$0.0491 from HK$0.1538 a year ago. Despite this, insider confidence is evident with recent share purchases by board members throughout 2024, signaling potential optimism about future prospects despite current financial challenges and reliance on external borrowing for funding.
Overview: Comba Telecom Systems Holdings specializes in providing wireless telecommunications network system equipment and services, as well as operator telecommunication services, with a market cap of HK$1.95 billion.
Operations: The company primarily generates revenue from Wireless Telecommunications Network System Equipment and Services, contributing HK$5824.14 million, and Operator Telecommunication Services, contributing HK$157.83 million. For the period ending September 30, 2023, it reported a gross profit margin of 28.23% on total revenue of HK$6266.16 million and net income of HK$109.36 million with operating expenses amounting to HK$1720.19 million.
PE: 410.1x
Comba Telecom Systems Holdings has seen insider confidence, with Tung Ling Fok purchasing 1.83 million shares valued at HK$930,371 in recent months. Despite a volatile share price and a projected loss of up to HK$160 million for H1 2024 due to delayed telecom projects and lower income, the company is actively repurchasing shares under a new mandate. This buyback program aims to enhance net assets per share and earnings per share, reflecting strategic efforts amidst current challenges.
Overview: Skyworth Group is a diversified technology company engaged in smart household appliances, smart systems technology, modern services, and new energy businesses with a market cap of approximately CN¥8.07 billion.
Operations: Skyworth Group's revenue streams are diversified across Smart Household Appliances (CN¥31.38 billion), New Energy Business (CN¥23.35 billion), Smart Systems Technology Business (CN¥10.66 billion), and Modern Services and Others (CN¥5.48 billion). The gross profit margin has exhibited variability, with recent figures around 13.76% to 15.22%. Operating expenses include significant allocations to sales & marketing and R&D, impacting net income margins which have fluctuated between approximately 1.29% and 3.34%.
PE: 5.4x
Skyworth Group, a small-cap stock in Hong Kong, is currently expanding into the Russian market with innovative products like the BM series and Frame+ TV. The company has initiated a share repurchase program authorized to buy back up to 236 million shares, potentially boosting net asset value and earnings per share. Insider confidence is evident as CEO Chi Shi recently purchased 2.19 million shares for approximately HK$6.3 million, indicating strong belief in the company's future prospects.
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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:173 SEHK:2342 and SEHK:751.
