As global markets react to the Federal Reserve's anticipated rate cuts and China's cautious economic stance, small-cap stocks in Hong Kong are drawing renewed interest. With the Hang Seng Index showing resilience amid broader market fluctuations, it's an opportune time to explore undervalued small caps with notable insider action. In this environment, identifying a good stock often involves looking for companies with strong fundamentals that insiders are confident in, as evidenced by their recent buying activities.
Top 10 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￥8.32 billion.
Operations: Shanghai Chicmax Cosmetic generates revenue primarily from the manufacture and sale of cosmetic products. For the period ending 2024-06-30, it reported a gross profit margin of 74.96% with significant operating expenses driven mainly by sales and marketing costs.
PE: 17.6x
Shanghai Chicmax Cosmetic, a small cap in Hong Kong, has shown significant growth with sales reaching CNY 3.5 billion for the first half of 2024, up from CNY 1.6 billion the previous year. Net income also surged to CNY 401.2 million from CNY 101 million. Insider confidence is evident with recent share purchases in early August and May's board changes bringing fresh perspectives. The company proposed an interim dividend of RMB 0.75 per share, reflecting their strong financial health and potential for future value appreciation.
Overview: Comba Telecom Systems Holdings provides operator telecommunication services and wireless telecommunications network system equipment and services, with a market cap of HK$1.37 billion.
Operations: The company generates revenue primarily from Wireless Telecommunications Network System Equipment and Services, with a smaller portion from Operator Telecommunication Services. For the period ending 2023-06-30, the gross profit margin was 28.63%, reflecting a gross profit of HK$1875.39 million on revenues of HK$6550.35 million. Operating expenses were substantial at HK$1738.60 million, impacting net income which stood at HK$212.03 million with a net income margin of 3.24%.
PE: -11.8x
Comba Telecom Systems Holdings has seen insider confidence, with Tung Ling Fok purchasing 1.83 million shares valued at HK$930,371 in the past three months. Despite earnings declining by 1.7% annually over five years and a recent decision to not declare an interim dividend for the first half of 2024, the company is actively repurchasing shares under a new program authorized in May 2024. This buyback aims to enhance net assets per share amidst global telecom project delays impacting revenue and profit margins.
Overview: Skyworth Group is a diversified company engaged in smart household appliances, smart systems technology, modern services, and new energy business with a market cap of approximately CN￥7.10 billion.
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 a notable trend, reaching 21.93% in March 2016 before declining to 13.76% by June 2023.
PE: 5.2x
Skyworth Group, a small-cap player in Hong Kong, has caught attention due to its undervalued nature. The company recently reported half-year sales of CNY 265 million and net income of CNY 384 million, showing improvement from last year. CEO Chi Shi's purchase of 2.19 million shares for approximately A$6.3 million indicates strong insider confidence. Additionally, Skyworth's strategic expansion into the Russian market with innovative products highlights its growth potential despite existing challenges.
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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