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The Hong Kong stock market has experienced a notable surge, driven by China's recent robust stimulus measures aimed at revitalizing its economy. This positive sentiment has lifted the Hang Seng Index significantly, creating an opportune moment to explore potential undervalued stocks. In such a dynamic environment, identifying stocks that are trading below their intrinsic value can be particularly rewarding for investors looking to capitalize on market inefficiencies.
Top 10 Undervalued Stocks Based On Cash Flows In Hong Kong
| Name | Current Price | Fair Value (Est) | Discount (Est) |
| FIT Hon Teng (SEHK:6088) | HK$2.37 | HK$4.31 | 45% |
| Bairong (SEHK:6608) | HK$8.74 | HK$16.78 | 47.9% |
| Shanghai INT Medical Instruments (SEHK:1501) | HK$28.70 | HK$56.47 | 49.2% |
| Akeso (SEHK:9926) | HK$67.40 | HK$134.25 | 49.8% |
| Digital China Holdings (SEHK:861) | HK$2.95 | HK$5.86 | 49.6% |
| Nayuki Holdings (SEHK:2150) | HK$1.82 | HK$3.38 | 46.1% |
| Hua Hong Semiconductor (SEHK:1347) | HK$19.02 | HK$37.14 | 48.8% |
| DPC Dash (SEHK:1405) | HK$76.45 | HK$136.57 | 44% |
| AK Medical Holdings (SEHK:1789) | HK$4.72 | HK$8.42 | 44% |
| Ming Yuan Cloud Group Holdings (SEHK:909) | HK$2.61 | HK$4.72 | 44.7% |
Let's review some notable picks from our screened stocks.
Hua Hong Semiconductor
Overview: Hua Hong Semiconductor Limited is an investment holding company that manufactures and sells semiconductor products, with a market cap of HK$39.53 billion.
Operations: The company's revenue segments include the manufacturing and sale of semiconductor products.
Estimated Discount To Fair Value: 48.8%
Hua Hong Semiconductor is trading at HK$19.02, significantly below its estimated fair value of HK$37.14. Despite a decline in profit margins from 19.6% to 4.5% over the past year and lower net income for Q2 2024 (US$6.67 million), earnings are forecast to grow by 33.16% annually over the next three years, outpacing the Hong Kong market's growth rate of 12%. Revenue is expected to increase by around US$500 million to US$520 million in Q3 2024.
Swire Properties
Overview: Swire Properties Limited, with a market cap of HK$92.15 billion, develops, owns, and operates mixed-use commercial properties in Hong Kong, Mainland China, the United States, and internationally through its subsidiaries.
Operations: Swire Properties Limited generates revenue from property investment (HK$14.39 billion), hotels (HK$945 million), and property trading (HK$119 million).