The Hong Kong market has recently faced a challenging environment, with the Hang Seng Index declining by 3.03% as investors react to weak corporate earnings and economic data. Despite these headwinds, opportunities can still be found among small-cap stocks that show strong fundamentals and insider action. In this context, identifying undervalued small-cap stocks with significant insider activity can offer potential for growth even in uncertain market conditions.
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 primarily in Hong Kong and Mainland China, and has a market cap of HK$9.76 billion.
Operations: K. Wah International Holdings generates revenue primarily from property development in Mainland China and Hong Kong, with additional income from property investment. The company has experienced fluctuations in its net profit margin, which reached a high of 76.44% in December 2014 and a low of 11.24% in June 2024, reflecting variability in operational efficiency and non-operating expenses over time.
PE: 11.0x
K. Wah International Holdings, a small cap in Hong Kong, recently reported a dip in earnings for the half year ending June 30, 2024, with sales at HK$1.21 billion and net income at HK$153.79 million compared to last year's HK$3.10 billion and HK$481.91 million respectively. Despite this downturn, insider confidence remains strong with notable share purchases by executives throughout the past six months. The company declared an interim cash dividend of HKD 0.04 per share payable on October 25, reflecting potential future growth amidst current undervaluation concerns.
Overview: Lee & Man Paper Manufacturing is a company engaged in the production of pulp, tissue paper, and packaging paper with a market cap of approximately HK$18.23 billion.
Operations: The company generates revenue primarily from Packaging Paper, Tissue Paper, and Pulp. Over recent periods, the net income margin has shown variability, with a notable decline to 2.67% as of June 30, 2023. The cost of goods sold (COGS) consistently represents a significant portion of expenses, impacting overall profitability.
PE: 5.9x
Lee & Man Paper Manufacturing, a notable player in the Hong Kong small-cap sector, recently declared an interim dividend of HK$0.062 per share for the six months ending June 30, 2024. Their half-year results showed sales of HK$12.51 billion and net income of HK$805.69 million, a substantial increase from last year’s HK$359.9 million. Insider confidence is evident with Ho Chung Lee purchasing 483,000 shares valued at approximately HK$1.1 million in July 2024, reflecting strong belief in the company's potential growth and value proposition despite higher risk funding sources through external borrowing only.
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$2.43 billion.
Operations: The company's primary revenue streams are from Wireless Telecommunications Network System Equipment and Services (HK$4941.02 million) and Operator Telecommunication Services (HK$156.22 million). For the period ending June 30, 2023, the gross profit margin was 28.63%, reflecting a gross profit of HK$1875.39 million on revenues of HK$6550.35 million.
PE: -11.5x
Comba Telecom Systems Holdings, a small cap in Hong Kong, recently faced challenges with a projected loss of HK$160 million for the first half of 2024 due to delayed network projects and declining gross profit. Despite this, insider confidence is evident through share purchases over the past six months. The company decided against declaring an interim dividend for H1 2024. Their volatile share price reflects market uncertainties, but ongoing industry engagements like MWC Shanghai suggest potential future opportunities.
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:2314 and SEHK:2342.
