As the Federal Reserve's recent rate cut reverberates through global markets, small-cap stocks in Hong Kong have caught the attention of investors seeking undervalued opportunities. With the Hang Seng Index gaining 5.12% amid this broader market rally, September 2024 presents a compelling backdrop for exploring small-cap stocks that show potential for growth and have seen notable insider activity. In such an environment, identifying companies with strong fundamentals and insider confidence can be crucial to making informed investment decisions.
Top 5 Undervalued Small Caps With Insider Buying In Hong Kong
Overview: Shanghai Chicmax Cosmetic is a company 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, with recent figures reaching CN¥6106.30 million. The gross profit margin has shown an upward trend, peaking at 74.96% as of June 2024. Operating expenses are mainly driven by sales and marketing costs, which amounted to CN¥3406.32 million in the same period.
PE: 18.1x
Shanghai Chicmax Cosmetic, a small cap in Hong Kong, has shown significant growth with first-half 2024 sales reaching CNY 3.5 billion, more than doubling from the previous year. Net income also surged to CNY 401.2 million from CNY 100.97 million. Insider confidence is evident with recent share purchases by executives over the past six months. Additionally, proposed changes in company bylaws and an upcoming interim dividend of RMB 0.75 per share further highlight its dynamic operational adjustments and shareholder returns strategy.
Overview: Skyworth Group is a diversified technology company primarily engaged in smart household appliances, smart systems technology, modern services, and new energy businesses with a market capitalization of approximately CN¥7.48 billion.
Operations: The company derives its revenue primarily from Smart Household Appliances (CN¥32.51 billion), New Energy Business (CN¥20.21 billion), Smart Systems Technology Business (CN¥9.84 billion), and Modern Services and Others (CN¥5.80 billion). Over recent periods, the gross profit margin has shown fluctuations, reaching 14.36% as of June 2024, with operating expenses consistently impacting net income margins which stood at 1.72% for the same period.
PE: 5.6x
Skyworth Group, a small cap in Hong Kong, has shown promising signs of being undervalued. Recent insider confidence is evident with Chi Shi purchasing 2.19 million shares valued at CNY 6.3 million between August and September 2024, reflecting a significant 16.52% increase in their holdings. 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 the previous year. Additionally, Skyworth's strategic expansion into the Russian market showcases its commitment to growth and innovation despite relying on higher-risk external borrowing for funding needs.
Overview: Ferretti is engaged in the design, construction, and marketing of yachts and recreational boats, with a market cap of approximately €1.14 billion.
Operations: The primary revenue stream comes from the design, construction, and marketing of yachts and recreational boats. For the period ending June 30, 2024, gross profit margin was 36.04% while net income margin stood at 6.67%. Operating expenses include significant allocations to general & administrative costs and depreciation & amortization.
PE: 10.4x
Ferretti, a notable player in the luxury yacht industry, has seen significant insider confidence with share purchases throughout 2023. Despite being recently dropped from the S&P Global BMI Index on September 10, 2024, its earnings are forecast to grow at 12.48% annually. The company reported sales of €695.1 million for H1 2024, up from €628.18 million a year ago. Leadership changes include Mr. Jiang Kui as Chairman and Mr. Hao as Joint Company Secretary since August 29 and August 12 respectively.
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:751 and SEHK:9638.
