As global markets react to the Federal Reserve's anticipated interest rate cuts, small-cap stocks have been outperforming their larger counterparts, with the Hong Kong market showing promising signs of resilience. Amid this backdrop, identifying undervalued small-cap stocks with insider buying can be a strategic move for investors looking to capitalize on potential growth opportunities. In this article, we will explore three such stocks in Hong Kong that are currently attracting attention due to their valuation and insider activity.
Top 10 Undervalued Small Caps With Insider Buying In Hong Kong
Overview: Shanghai Chicmax Cosmetic is a company involved in the manufacture and sale of cosmetic products with a market cap of CN￥7.25 billion.
Operations: Shanghai Chicmax Cosmetic generates revenue primarily from the manufacture and sale of cosmetic products, with recent figures reaching CN￥6106.3 million. The company has shown a notable trend in its gross profit margin, which increased to 74.96% as of June 30, 2024. Operating expenses are significantly driven by sales and marketing costs, which amounted to CN￥3406.32 million for the same period.
PE: 17.1x
Shanghai Chicmax Cosmetic, a small cap in Hong Kong, has shown promising growth with half-year sales of CNY 3.5 billion and net income of CNY 401.2 million, both significantly up from last year. The company announced an interim dividend of RMB 0.75 per share for the six months ended June 2024, reflecting strong insider confidence in their performance. Their major brand KANS and second-tier brand newpage have driven this rapid revenue increase across multiple channels.
Overview: Comba Telecom Systems Holdings specializes in providing operator telecommunication services and wireless telecommunications network system equipment and services, with a market cap of approximately HK$1.34 billion.
Operations: The primary revenue streams for Comba Telecom Systems Holdings come from Wireless Telecommunications Network System Equipment and Services (HK$4941.02 million) and Operator Telecommunication Services (HK$156.22 million). For the period ending June 30, 2023, the company reported revenue of HK$6550.35 million with a gross profit margin of 28.63%. The net income margin for this period was 3.24%, reflecting net income of HK$212.03 million against total operating expenses of HK$1738.60 million and COGS at HK$4674.96 million.
PE: -11.9x
Comba Telecom Systems Holdings, a smaller player in the Hong Kong market, has seen insider confidence with Tung Ling Fok purchasing 1.83 million shares worth HK$930,371 between June and August 2024. Despite recent volatility and a decline in earnings by 1.7% annually over the past five years, the company commenced share repurchases in June 2024 to potentially enhance net assets per share. However, it faces challenges such as delayed network projects and a forecasted loss of up to HK$160 million for H1 2024.
Overview: Skyworth Group is a diversified technology company engaged in smart household appliances, smart systems technology, modern services, and new energy businesses with a market cap of CN￥5.97 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 has seen fluctuations in its gross profit margin, reaching 21.92% in Q1 2016 but declining to 13.76% by Q4 2023. Operating expenses have consistently impacted net income, which peaked at CN￥2.60 billion in Q3 2015 but fell to CN￥790 million by mid-2023 despite increasing revenues over the same period.
PE: 5.5x
Skyworth Group, a small cap in Hong Kong, recently reported half-year sales of CNY 265 million, up from CNY 252 million the previous year. Despite a slight dip in revenue to CNY 30.15 billion from CNY 32.3 billion, net income rose to CNY 384 million compared to last year's CNY 302 million. CEO and Executive Director Chi Shi's purchase of over two million shares worth approximately US$6.3 million signifies insider confidence in the company's future prospects. Skyworth's strategic expansion into Russia highlights its commitment to technological innovation and market diversification, aiming for continued growth despite current financial challenges.
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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:2145 SEHK:2342 and SEHK:751.
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