As global markets show signs of recovery and investor sentiment improves, the Hang Seng Index in Hong Kong has also seen a notable uptick, reflecting optimism despite ongoing economic challenges. In this environment, identifying undervalued small-cap stocks with insider action can offer unique investment opportunities. When evaluating such stocks, it is crucial to consider factors like strong fundamentals and recent insider buying activity.
Top 10 Undervalued Small Caps With Insider Buying In Hong Kong
Overview: Comba Telecom Systems Holdings specializes in providing operator telecommunication services and wireless telecommunications network system equipment and services, with a market cap of HK$1.89 billion.
Operations: The company generates revenue primarily from Wireless Telecommunications Network System Equipment and Services (HK$5824.14 million) and Operator Telecommunication Services (HK$157.83 million). The cost of goods sold (COGS) for the most recent period was HK$4319.29 million, resulting in a gross profit of HK$1662.69 million with a gross profit margin of 27.79%. Operating expenses amounted to HK$1701.78 million, impacting the net income which stood at HK$6.70 million for the same period, reflecting a net income margin of 0.11%.
PE: 377.3x
Comba Telecom Systems Holdings, a small Hong Kong-based company, has seen insider confidence with Tung Ling Fok purchasing 1.83 million shares for HK$930,371 in early 2024. Despite a projected loss of up to HK$160 million for the first half of 2024 due to delayed telecom projects and equity investment losses, the company initiated share repurchases in June 2024 aiming to enhance net assets per share. This strategic move reflects potential future value despite recent financial setbacks.
Overview: Skyworth Group is a diversified technology company engaged in the production and sale of smart household appliances, smart systems technology, modern services, and new energy solutions with a market cap of CN¥9.37 billion.
Operations: Skyworth Group generates revenue primarily from its Smart Household Appliances Business (CN¥31.38 billion) and New Energy Business (CN¥23.35 billion), with additional contributions from Smart Systems Technology and Modern Services. The company's cost of goods sold (COGS) significantly impacts its gross profit, which has shown variability, most recently at 13.80% in December 2023. Operating expenses include notable allocations to sales & marketing and R&D activities, influencing net income margins that have also fluctuated over time, reaching 1.55% in the same period.
PE: 5.5x
Skyworth Group, a small cap in Hong Kong, has recently drawn attention due to significant insider confidence. Chi Shi purchased 2.19 million shares for HK$6.3 million between May and June 2024, reflecting a notable 16% increase in their holdings. Earnings are projected to grow by 13% annually, although the company relies entirely on external borrowing for funding. Skyworth also initiated a share repurchase program in June 2024, potentially boosting net asset value and earnings per share.
Overview: Ferretti is a company specializing in the design, construction, and marketing of yachts and recreational boats with a market cap of €1.29 billion.
Operations: The company generates revenue primarily from the design, construction, and marketing of yachts and recreational boats, with recent annual revenue reaching €1.23 billion. Cost of goods sold (COGS) stands at €773.32 million, leading to a gross profit of €455.82 million for the latest period. The net income margin has shown an upward trend, reaching 6.76% most recently.
PE: 11.3x
Ferretti, a small cap in Hong Kong, has shown potential for growth with earnings forecasted to increase by 12.35% annually. Recent insider confidence is evident as key figures purchased shares over the past six months, suggesting belief in its future performance. The company’s funding structure relies entirely on external borrowing, which carries higher risk but also underscores strategic financial management. On August 12, 2024, Ferretti appointed Mr. Qinggui Hao as joint company secretary, bringing extensive experience from Weichai Power and Shandong Heavy Industry Group.
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:2342 SEHK:751 and SEHK:9638.
