As global markets navigate a period of economic adjustments, the Hong Kong market has shown resilience amid fluctuating inflation data and shifting investor sentiment. The Hang Seng Index's recent performance reflects broader trends impacting small-cap stocks, making this an opportune time to explore undervalued opportunities with insider buying. In this context, identifying a good stock often involves looking at companies that demonstrate strong fundamentals and potential for growth despite broader market volatility.
Top 5 Undervalued Small Caps With Insider Buying In Hong Kong
Overview: Shenzhen International Holdings operates in logistics, toll roads, and environmental protection sectors, with a market cap of approximately HK$24.36 billion.
Operations: The company generates revenue primarily from Toll Roads and General-Environmental Protection Business (HK$9.75 billion) and Logistics Park Transformation and Upgrading Services (HK$5.59 billion). The gross profit margin has shown fluctuations, with a recent figure of 36.76% as of December 31, 2023.
PE: 5.8x
Shenzhen International Holdings has demonstrated insider confidence with Zhengyu Liu purchasing 693,000 shares for HK$3.97 million in the past year. Despite a slight dip in sales to HK$6.61 billion for H1 2024, net income surged to HK$652.7 million from HK$92.05 million a year ago, reflecting strategic asset transfers and reduced financial costs. Debt coverage remains a concern due to reliance on external borrowing, but earnings are projected to grow annually by 12.86%.
Overview: Skyworth Group is a diversified company operating in smart household appliances, smart systems technology, modern services, and new energy business with a market cap of approximately CN¥7.21 billion.
Operations: Skyworth Group generates revenue primarily from its Smart Household Appliances Business, New Energy Business, Smart Systems Technology Business, and Modern Services. The company's gross profit margin has fluctuated over the years, with a recent figure of 14.36% as of June 2024. Key operating expenses include Sales & Marketing and R&D expenses.
PE: 5.0x
Skyworth Group, a smaller player in Hong Kong's market, has shown signs of being undervalued. For the half year ending June 30, 2024, it reported earnings with net income rising to CNY 384 million from CNY 302 million the previous year. Notably, insider confidence is evident as Chi Shi purchased over two million shares worth approximately CNY 6.3 million between January and June 2024. Skyworth’s expansion into Russia highlights its innovative product line and commitment to technological advancements.
Overview: Ferretti is engaged in the design, construction, and marketing of yachts and recreational boats with a market cap of approximately €1.29 billion.
Operations: The company generates revenue primarily from the design, construction, and marketing of yachts and recreational boats. For the period ending 2024-06-30, it reported a gross profit margin of 36.04% on revenues of €1.30 billion. Net income for this period was €86.46 million, resulting in a net income margin of 6.67%.
PE: 10.3x
Ferretti, a small-cap stock in Hong Kong, has shown promising growth with earnings forecasted to increase by 12.48% annually. Recent insider confidence is evident as executives purchased shares in Q2 2024, indicating faith in the company's future. Despite leadership changes with Mr. Tan and Mr. de Vivo stepping down, Ferretti reported half-year sales of €695 million and net income of €43.86 million, up from last year’s €628 million and €40 million respectively, reflecting solid financial health amidst transition periods.
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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:751 and SEHK:9638.
