The Hong Kong market has recently seen a surge in the Hang Seng Index, gaining 5.12% despite disappointing economic data from China. This uptick comes amid broader global trends influenced by the U.S. Federal Reserve's decision to cut interest rates, which has buoyed investor sentiment. In this context, identifying undervalued small-cap stocks with insider buying can be particularly rewarding, as these companies often offer growth potential that is not yet fully recognized by the market.
Top 5 Undervalued Small Caps With Insider Buying In Hong Kong
Overview: Shanghai Chicmax Cosmetic is primarily engaged in the manufacture and sale of cosmetic products, with a market capitalization of approximately CN¥7.65 billion.
Operations: The company generates revenue primarily from the manufacture and sale of cosmetic products, with recent revenue reaching CN¥6106.30 million. The gross profit margin has shown an upward trend, reaching 74.96% as of the latest period ending June 2024. Operating expenses are significantly influenced by sales and marketing costs, which stood at CN¥3406.32 million for the same period.
PE: 16.7x
Shanghai Chicmax Cosmetic, a small player in Hong Kong's market, shows strong potential for growth. For the first half of 2024, they reported sales of CNY 3.50 billion and net income of CNY 401.2 million—both significant increases from the previous year. They proposed an interim dividend of RMB 0.75 per share, with payment set for November 19, 2024. Notably, insider confidence is evident through recent share purchases between July and September this year.
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$17.92 billion.
Operations: The company generates revenue primarily from Packaging Paper and Tissue Paper segments, with Packaging Paper contributing the largest share. The net income margin has shown variability, reaching a high of 19.51% in December 2017 and a low of 2.67% in June 2023. Gross profit margins have also fluctuated, peaking at 29.08% in December 2017 and dipping to 7.72% in June 2023 due to changes in cost structures and operating expenses over time.
PE: 6.2x
Lee & Man Paper Manufacturing has caught attention with its recent insider confidence, as Ho Chung Lee purchased 483,000 shares worth HK$1.10 million in August 2024, reflecting a significant increase of 122% in their holdings. The company reported impressive financials for the first half of 2024, with sales at HK$12.51 billion and net income more than doubling to HK$805.69 million compared to the previous year. Additionally, they declared an interim dividend of HK$0.062 per share payable on September 5, indicating strong cash flow management despite higher-risk funding sources primarily from external borrowing.
Overview: Skyworth Group operates in the smart household appliances, smart systems technology, modern services, and new energy sectors with a market cap of approximately CN¥ 9.23 billion.
Operations: Skyworth Group generates revenue from its New Energy Business (CN¥20.21 billion), Modern Services and Others (CN¥5.80 billion), Smart Systems Technology Business (CN¥9.84 billion), and Smart Household Appliances Business (CN¥32.51 billion). The company's gross profit margin has shown variability, reaching 21.23% in the period ending September 30, 2015, and declining to 13.76% by June 30, 2023.
PE: 5.4x
Skyworth Group, a small-cap stock in Hong Kong, has shown promising signs of being undervalued. Recently, CEO & Executive Director Chi Shi purchased 2.19 million shares for CNY 6.3 million between January and August 2024, reflecting insider confidence. For the half-year ending June 30, 2024, Skyworth reported sales of CNY 265 million and net income of CNY 384 million—up from CNY 302 million a year ago. Despite higher risk funding sources and expanding into the Russian market with innovative products like the BM series TVs developed with BMW’s Designworks studio, their earnings per share improved to CNY 0.1631 from last year's CNY 0.1195.
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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:2145 SEHK:2314 and SEHK:751.
