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3 Undervalued Small Caps In Hong Kong With Recent Insider Buying
In recent weeks, the Hong Kong market has experienced fluctuations, with the Hang Seng Index declining by 2.11% amidst broader economic challenges and deflationary pressures in China. Despite these headwinds, small-cap stocks continue to capture investor interest due to their potential for growth and strategic insider activities that can signal confidence in a company's prospects. Identifying promising small-cap opportunities involves assessing factors such as financial health, market position, and recent insider buying trends that may indicate underlying value in today's dynamic market environment.
Top 10 Undervalued Small Caps With Insider Buying In Hong Kong
Overview: China Lesso Group Holdings is a leading manufacturer and distributor of building materials and interior decoration products, with a market capitalization of CN￥17.88 billion.
Operations: The company generates revenue primarily from its Plastics & Rubber segment, amounting to CN￥29.13 billion. Over recent periods, the gross profit margin has shown fluctuations, reaching 27.96% in June 2023 and declining slightly to 26.04% by October 2024. Operating expenses have remained a significant component of costs, with sales and marketing as well as general and administrative expenses being notable contributors.
PE: 5.7x
China Lesso Group Holdings, a smaller player in Hong Kong's market, has seen insider confidence with Luen Hei Wong purchasing 4 million shares valued at approximately CNY 10.05 million between August and October 2024. Despite a decline in half-year sales to CNY 13.56 billion and net income to CNY 1.04 billion compared to the previous year, the company is forecasted for annual earnings growth of around 11%. However, its reliance on external borrowing presents higher financial risk amidst high debt levels.
Overview: Gemdale Properties and Investment focuses on property development and property investment and management, with a market capitalization of CN￥4.68 billion.
Operations: The company's revenue primarily stems from Property Development, with a smaller contribution from Property Investment and Management. Recent financial data indicates fluctuations in gross profit margin, which reached 10.57% by the end of 2023 but showed negative values earlier in the year. Operating expenses have shown an upward trend, impacting overall profitability.
PE: -1.8x
Gemdale Properties and Investment, a smaller company in Hong Kong's market, has seen significant insider confidence with Lian Huat Loh purchasing 10 million shares for approximately RMB 2.6 million. Despite recent volatility and a net loss of RMB 2.18 billion for the first half of 2024, the company's contracted sales reached RMB 14.18 billion by September this year, showing resilience in sales performance amidst financial challenges. With high-risk funding sources and declining earnings over five years, careful consideration is warranted when evaluating future prospects.
Overview: Skyworth Group is a diversified company engaged in smart household appliances, smart systems technology, modern services, and new energy business with a market capitalization of approximately CN￥6.5 billion.
Operations: Skyworth Group's revenue primarily comes from its Smart Household Appliances Business and New Energy Business, with the former generating CN￥32.51 billion and the latter CN￥20.21 billion. The company's cost of goods sold (COGS) for the most recent period is CN￥57.15 billion, resulting in a gross profit margin of 14.36%.
PE: 5.7x
Skyworth Group, operating in Hong Kong's small-cap sector, recently reported a net income increase to CNY 384 million for the first half of 2024, up from CNY 302 million the previous year. Despite a decrease in revenue to CNY 30.15 billion from CNY 32.3 billion, insider confidence is evident with CEO Chi Shi purchasing over two million shares valued at approximately US$6.3 million, reflecting belief in future growth potential amidst their strategic expansion into Russia and innovative product developments.
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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:2128 SEHK:535 and SEHK:751.
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