The Hong Kong market has been buoyed by China's recent stimulus measures, leading to a surge in the Hang Seng Index and renewed optimism among investors. As economic conditions improve, small-cap stocks with insider action are drawing attention for their potential undervaluation. In this environment, identifying good stocks often involves looking for companies that show strong fundamentals and have insider buying activity, which can signal confidence from those closest to the business.
Top 10 Undervalued Small Caps With Insider Buying In Hong Kong
Overview: China Lesso Group Holdings is a leading manufacturer of building materials and interior decoration products, with a market cap of CN¥22.45 billion.
Operations: The company generates revenue primarily from its Plastics & Rubber segment, with operating expenses and non-operating expenses impacting net income. Over recent periods, gross profit margins have fluctuated around 26%, while net income margins have varied between approximately 6% and 13%.
PE: 5.8x
China Lesso Group Holdings, a small cap in Hong Kong, reported a decline in sales and net income for the half year ended June 30, 2024. Sales were CNY 13.56 billion compared to CNY 15.30 billion last year, while net income dropped to CNY 1.04 billion from CNY 1.49 billion. Despite this, insider confidence is evident with Luen Hei Wong purchasing four million shares worth approximately US$10 million between August and September 2024, indicating potential long-term value amidst current challenges.
Overview: Gemdale Properties and Investment focuses on property development and investment management, with operations in these segments contributing to its market presence.
Operations: The company generates revenue primarily through Property Development (CN¥17.26 billion) and Property Investment and Management (CN¥1.23 billion). For the period ending September 30, 2023, it reported a gross profit margin of 5.79% and a net income margin of 7.68%.
PE: -2.1x
Gemdale Properties and Investment, a smaller player in Hong Kong's real estate market, recently reported mixed financial results. For the first half of 2024, the company saw sales climb to CNY 3.29 billion from CNY 2.33 billion year-on-year but faced a net loss of CNY 2.18 billion due to increased impairment losses on properties under development and joint ventures. Despite these challenges, insider confidence is evident with Lian Huat Loh purchasing 10 million shares worth approximately A$2.6 million in August, boosting their holdings by nearly fivefold. The company's aggregate contracted sales for January-August 2024 reached RMB 12.43 billion over an area of approximately 944,400 square meters at an average price of RMB 13,600 per square meter.
Overview: Ming Yuan Cloud Group Holdings is a company that provides cloud services and on-premise software solutions, with a market cap of approximately CN¥10.68 billion.
Operations: The company's revenue streams primarily come from Cloud Services and On-premise Software and Services, with recent quarterly revenues totaling CN¥1.64 billion. The gross profit margin has shown fluctuations, most recently recorded at 79.48%. Operating expenses include significant allocations to sales & marketing, R&D, and general & administrative costs.
PE: -13.7x
Ming Yuan Cloud Group Holdings, a small cap in Hong Kong, has seen insider confidence with VP & Executive Director Xiaohui Chen purchasing 1 million shares valued at approximately HK$2.53 million, representing a 0.38% increase in their holdings. Despite reporting a net loss of CNY115.37 million for H1 2024, the company’s earnings per share improved from CNY-0.18 to CNY-0.06 year-on-year. Recent board changes and an ongoing share repurchase program indicate strategic efforts to bolster investor trust and enhance shareholder value amidst volatile market conditions.
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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:2128 SEHK:535 and SEHK:909.
