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Hong Kong's Top Undervalued Small Caps With Insider Buying In October 2024
In October 2024, as global markets experience a mix of economic shifts and monetary policy adjustments, Hong Kong's Hang Seng Index has faced challenges, reflecting broader market sentiments. Despite these hurdles, small-cap stocks in the region present intriguing opportunities for investors looking to capitalize on potential value plays amid insider activity. Identifying promising stocks in this environment often involves assessing factors such as strong fundamentals and strategic insider buying that could signal confidence in a company's future prospects.
Top 10 Undervalued Small Caps With Insider Buying In Hong Kong
Overview: Cheerwin Group is a company engaged in the production and distribution of household care, personal care, and pet products.
Operations: Household Care is the primary revenue stream, contributing significantly to total revenue alongside smaller contributions from Personal Care and Pets and Pet Products. The gross profit margin has shown an upward trend, reaching 47.89% in late 2024. Operating expenses are primarily driven by sales and marketing costs, with general and administrative expenses also playing a notable role.
PE: 11.6x
Cheerwin Group, a small player in Hong Kong's market, has caught attention with its recent financial performance and insider confidence. From January to October 2024, an insider purchased 300,000 shares for CNY 405,059. This move indicates potential trust in the company's prospects. For the first half of 2024, Cheerwin reported sales of CNY 1.25 billion and net income of CNY 179 million—both up from last year—demonstrating growth despite reliance on external borrowing for funding. The company declared a dividend increase to RMB 0.0538 per share payable in October, signaling shareholder value focus amidst board changes that could steer strategic directions positively.
Overview: Skyworth Group operates in the smart household appliances, smart systems technology, modern services, and new energy sectors with a market capitalization of CN￥7.42 billion.
Operations: Skyworth Group's revenue streams are primarily driven by 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 has experienced fluctuations in its gross profit margin, which reached 21.23% in late 2015 before declining to 13.76% by mid-2023. Operating expenses are significant, with sales & marketing and R&D being notable components contributing to overall costs.
PE: 5.9x
Skyworth Group, a Hong Kong-based company, has recently shown insider confidence with Chi Shi acquiring 2.19 million shares for HK$6.3 million, indicating potential belief in the company's prospects. Despite challenges like reliance on external borrowing and operating cash flow not fully covering debt, Skyworth's earnings grew to CNY 384 million in the first half of 2024 from CNY 302 million a year prior. The company repurchased over 123 million shares for HK$376.4 million this year and expanded into Russia with innovative products like the BM series TV developed alongside BMW Group's Designworks studio.
Overview: Ferretti is engaged in the design, construction, and marketing of yachts and recreational boats with a market capitalization of €1.94 billion.
Operations: The company generates revenue primarily from the design, construction, and marketing of yachts and recreational boats. As of the latest data, gross profit margin is 36.04%, reflecting a significant portion of revenue retained after covering cost of goods sold (COGS). Operating expenses include general and administrative costs which are substantial in their financial structure.
PE: 11.1x
Ferretti, a Hong Kong-listed company, has recently seen insider confidence with executives purchasing shares over the past year. Despite being dropped from the S&P Global BMI Index in September 2024, Ferretti's half-year sales rose to €695.1 million from €628.18 million last year, indicating growth potential. The company navigates leadership changes smoothly and maintains high-quality earnings with forecasted annual growth of 12.8%. However, it relies solely on external borrowing for funding, adding financial risk factors to consider.
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:6601 SEHK:751 and SEHK:9638.
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