Exploring Three Undervalued Small Caps In Hong Kong With Insider Actions

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Amid a backdrop of fluctuating global markets, Hong Kong's small-cap stocks present a unique landscape for investors seeking potential value. As the broader market contends with economic shifts and insider actions hint at strategic moves, understanding the underlying factors that drive small-cap success becomes crucial in identifying undervalued opportunities.

Top 10 Undervalued Small Caps With Insider Buying In Hong Kong

Name

PE

PS

Discount to Fair Value

Value Rating

Xtep International Holdings

10.7x

0.8x

43.68%

★★★★★★

Wasion Holdings

11.7x

0.8x

30.65%

★★★★☆☆

Sany Heavy Equipment International Holdings

7.7x

0.7x

-19.26%

★★★★☆☆

Nissin Foods

14.7x

1.3x

40.28%

★★★★☆☆

China Leon Inspection Holding

10.1x

0.7x

25.05%

★★★★☆☆

China Overseas Grand Oceans Group

2.9x

0.1x

-4.60%

★★★★☆☆

Transport International Holdings

11.4x

0.6x

44.94%

★★★★☆☆

Giordano International

8.7x

0.8x

36.02%

★★★☆☆☆

Shenzhen International Holdings

8.1x

0.8x

12.94%

★★★☆☆☆

Kinetic Development Group

4.2x

1.8x

15.31%

★★★☆☆☆

Click here to see the full list of 16 stocks from our Undervalued Small Caps With Insider Buying screener.

Let's dive into some prime choices out of from the screener.

Kinetic Development Group

Simply Wall St Value Rating: ★★★☆☆☆

Overview: Kinetic Development Group is a company focused on various business sectors, with a market capitalization of approximately CN¥1.27 billion.

Operations: The company generates revenue from the sale of goods, consistently achieving a gross profit margin that has risen from 9.05% in September 2013 to approximately 59.07% by July 2024, reflecting increasing efficiency or pricing power. Over the same period, net income has shown significant improvement, turning from a loss to a substantial gain with the latest reported net income margin at about 43.79%.

PE: 4.2x

Kinetic Development Group, a notable player in Hong Kong's market, recently saw insiders confidently purchasing shares, signaling strong belief in the company’s prospects. Despite a dividend cut to HK$0.05 per share and changes to its corporate governance structure approved on May 7, 2024, the firm remains attractive due to its financial health and strategic adjustments. With all liabilities backed by external borrowing—a riskier yet aggressive funding strategy—Kinetic is poised for intriguing developments post their Q1 2024 earnings report expected on May 31. This blend of insider activity and corporate adjustments paints a picture of a company recalibrating for future growth within its industry landscape.