The Hong Kong market has seen a mix of performance recently, with the Hang Seng Index gaining 2.14% amidst broader economic challenges in China. As investors navigate these fluctuating conditions, identifying undervalued small-cap stocks with insider buying can present unique opportunities. In this context, a good stock often combines strong fundamentals with favorable market sentiment and insider confidence, making it well-positioned to potentially benefit from current economic trends.
Top 10 Undervalued Small Caps With Insider Buying In Hong Kong
Overview: Shenzhen International Holdings operates in logistics, including parks, services, and port-related activities, as well as toll roads and environmental protection businesses, with a market cap of HK$25.38 billion.
Operations: The company generates revenue primarily from Toll Roads and General-Environmental Protection Business, which is the largest segment, followed by Logistics Park Transformation and Upgrading Services. Over recent periods, the net profit margin has shown a declining trend, reaching 0.05109% in June 2023 before slightly improving to 0.09266% in December 2023.
PE: 6.0x
Shenzhen International Holdings, a smaller player in Hong Kong's market, recently reported a significant jump in net income for H1 2024 to HK$652.7 million from HK$92.05 million last year. This surge is partly due to gains from transferring logistics hubs to REITs and reducing foreign exchange losses by optimizing its currency structure. Insider confidence is evident as Zhengyu Liu purchased 693,000 shares worth approximately HK$3.97 million recently. Despite relying solely on external borrowing for funding, the company shows promising profit growth prospects at an expected rate of 13% annually.
Overview: Shanghai Chicmax Cosmetic is engaged in the manufacture and sale of cosmetic products with a market cap of CN¥6.11 billion.
Operations: The company generates revenue primarily from the manufacture and sale of cosmetic products. For the period ending June 30, 2024, it reported a gross profit margin of 74.96%. Operating expenses include significant allocations to sales & marketing and R&D.
PE: 17.4x
Shanghai Chicmax Cosmetic, a small cap in Hong Kong, has shown impressive growth with sales reaching CNY 3.5 billion for the first half of 2024, up from CNY 1.6 billion a year ago. Net income surged to CNY 401.2 million from CNY 101 million during the same period. Insider confidence is evident with recent share purchases by executives between March and June 2024, signaling strong belief in the company's potential. Additionally, an interim dividend of RMB 0.75 per share has been proposed for shareholders' approval on September 30, reflecting robust financial health and commitment to returning value to investors.
Overview: Skyworth Group is a diversified technology company engaged in the production of smart household appliances, smart systems technology, modern services, and new energy business with operations generating billions of CN¥ annually.
Operations: Skyworth Group generates revenue primarily from its Smart Household Appliances Business (CN¥32.51 billion) and New Energy Business (CN¥20.21 billion). The company's gross profit margin has shown variability, reaching 21.93% in March 2016 but declining to 13.76% by June 2023. Operating expenses are significant, with Sales & Marketing and R&D being major components, impacting net income margins which have fluctuated over the years, peaking at 7.79% in March 2015 and dropping to around 1-2% in recent periods.
PE: 5.2x
Skyworth Group, a notable player among Hong Kong's undervalued small caps, recently reported mixed financial results for the first half of 2024. Sales rose to CNY 265 million from CNY 252 million year-on-year, while revenue dropped to CNY 30.15 billion from CNY 32.3 billion. Net income increased to CNY 384 million from last year's CNY 302 million. Demonstrating insider confidence, CEO Chi Shi purchased over two million shares worth approximately US$6.3 million in a transaction that increased their stake by over 16%. The company is also expanding into the Russian market with innovative products like the BM series and Frame+ TV, aiming for technological leadership and consumer appeal.
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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:152 SEHK:2145 and SEHK:751.
