As global markets navigate through heightened geopolitical tensions and fluctuating economic indicators, Hong Kong's Hang Seng Index has shown resilience with a notable climb of 10.2% amidst broader market volatility. In this dynamic environment, small-cap stocks in Hong Kong present intriguing opportunities, particularly when insider buying suggests potential undervaluation. Identifying such stocks often involves considering factors like company fundamentals and market sentiment which can be pivotal in determining their future performance potential.
Top 10 Undervalued Small Caps With Insider Buying In Hong Kong
Overview: China Lesso Group Holdings is a leading manufacturer and distributor of building materials, primarily focusing on plastics and rubber products, with a market capitalization of CN¥21.84 billion.
Operations: The company generates revenue primarily from its Plastics & Rubber segment, with a recent figure of CN¥29.13 billion. The cost of goods sold (COGS) has been recorded at CN¥21.55 billion, impacting the gross profit margin which stands at 26.04%. Operating expenses include significant allocations to sales and marketing as well as general and administrative costs, contributing to the net income margin of 6.58%.
PE: 6.4x
China Lesso Group Holdings, a smaller player in Hong Kong's market, has recently caught attention due to insider confidence. In early 2024, an insider purchased 4 million shares for approximately CNY 10.05 million, reflecting belief in the company's potential despite challenges. The company faces high debt levels and relies on external borrowing but anticipates earnings growth of 10.65% annually. Recent earnings showed decreased sales and net income compared to last year, yet future prospects remain cautiously optimistic given projected growth rates.
Overview: Lee & Man Paper Manufacturing is a company engaged in the production of pulp, tissue paper, and packaging paper with a market capitalization of HK$9.81 billion.
Operations: The company's revenue is primarily derived from packaging paper and tissue paper, with packaging paper contributing significantly more. The cost of goods sold (COGS) has a substantial impact on the gross profit, which shows fluctuations over time. Notably, the gross profit margin peaked at 29.08% in December 2017 but has seen a decline to 12.49% by October 2024. Operating expenses are consistently significant, with general and administrative expenses being a major component.
PE: 8.1x
Lee & Man Paper Manufacturing, a smaller player in Hong Kong's market landscape, has caught attention with its recent financial performance and insider confidence. They reported a significant increase in net income to HK$805.69 million for the first half of 2024, up from HK$359.9 million the previous year. Insider confidence is evident as Ho Chung Lee purchased 483,000 shares valued at approximately HK$1.1 million between January and October 2024, signaling potential optimism about future growth prospects despite reliance on external borrowing for funding needs.
Overview: Gemdale Properties and Investment is engaged in property development and property investment and management, with a focus on the real estate sector, and has a market capitalization of approximately CN¥6.98 billion.
Operations: The company's revenue primarily stems from its Property Development and Property Investment and Management segments. Over time, the gross profit margin has shown fluctuations, reaching a peak of 41.63% in December 2018 before experiencing declines to -2.60% by June 2023, with a slight recovery to 10.57% by December 2023.
PE: -2.0x
Gemdale Properties and Investment has seen insider confidence with Lian Huat Loh purchasing 10 million shares recently, indicating potential value recognition despite a volatile share price over the past three months. The company reported a net loss of CNY 2,179 million for the first half of 2024, contrasting last year's profit due to increased impairment losses. Sales figures show growth with RMB 12.43 billion in contracted sales from January to August 2024, reflecting ongoing market activity amidst financial challenges.
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:2128 SEHK:2314 and SEHK:535.
