As the Hong Kong market navigates through a period of mixed economic signals and subdued investor sentiment, small-cap stocks have garnered attention for their potential value. In this environment, identifying stocks with strong fundamentals and insider buying can offer promising opportunities for discerning investors.

Top 10 Undervalued Small Caps With Insider Buying In Hong Kong

Click here to see the full list of 16 stocks from our Undervalued SEHK Small Caps With Insider Buying screener.

We'll examine a selection from our screener results.

Shenzhen International Holdings

Simply Wall St Value Rating: ★★★★★★

Overview: Shenzhen International Holdings operates in logistics, toll roads, and environmental protection sectors with a market cap of HK$28.39 billion.

Operations: The company's primary revenue streams include Toll Roads and Environmental Protection Business, Logistics Park Transformation and Upgrading Services, Port and Related Services, Logistic Parks, and Logistic Services. The net profit margin has shown variability, with a notable decline to 0.05109% in June 2023 from a high of 0.39925% in June 2015.

PE: 6.0x

Shenzhen International Holdings reported a notable increase in net income for the first half of 2024, reaching HK$652.7 million from HK$92.05 million the previous year, driven by gains from transferring logistics hubs to REITs and reduced foreign exchange losses. Insider confidence is evident with Zhengyu Liu's purchase of 693,000 shares worth approximately HK$3.97 million between July and August 2024. Despite relying on external borrowing, the company maintains a strong financial position with expected earnings growth of 12.86% annually.

• Get an in-depth perspective on Shenzhen International Holdings' performance by reading our valuation report here.

• Review our historical performance report to gain insights into Shenzhen International Holdings''s past performance.

Skyworth Group

Simply Wall St Value Rating: ★★★☆☆☆

Overview: Skyworth Group is a diversified technology company engaged in smart household appliances, smart systems technology, modern services, and new energy business with a market cap of approximately CN￥8.15 billion.

Operations: Skyworth Group generates revenue primarily from its Smart Household Appliances Business, Smart Systems Technology Business, New Energy Business, and Modern Services. For the period ending September 30, 2023, the company reported a gross profit margin of 15.22%, with operating expenses totaling CN￥2.91 billion against a gross profit of CN￥3.45 billion.

PE: 5.2x

Skyworth Group, a small Hong Kong-based company, recently reported half-year earnings with net income rising to CNY 384 million from CNY 302 million last year. Revenue dipped slightly to CNY 30.15 billion from CNY 32.3 billion, but basic earnings per share increased to CNY 0.1631 from CNY 0.1195. Notably, Chi Shi's insider confidence is evident with their purchase of over two million shares worth approximately US$6.3 million in June, reflecting strong belief in Skyworth’s future prospects amidst its expansion into the Russian market and ongoing technological innovations such as the BM series TVs developed with BMW Group's Designworks studio and low blue light technology for eye care.

• Click here to discover the nuances of Skyworth Group with our detailed analytical valuation report.

• Gain insights into Skyworth Group's historical performance by reviewing our past performance report.

IGG

Simply Wall St Value Rating: ★★★★★☆

Overview: IGG is a company focused on the development and operation of online games, with a market cap of approximately HK$4.89 billion.

Operations: The company generates revenue primarily from the development and operation of online games. For the period ending 2024-06-30, it reported a gross profit margin of 77.58%. Operating expenses include significant allocations to sales and marketing (HK$2.37 billion) and research and development (HK$828.94 million).

PE: 5.0x

IGG reported earnings for H1 2024, showing a significant turnaround with HK$2.74 billion in sales and HK$330.95 million net income, compared to a loss the previous year. Basic earnings per share rose to HK$0.29 from a loss of HK$0.31 last year. The company announced an interim dividend of HKD 0.085 per share, payable on September 27, 2024, reflecting strong performance and confidence in future prospects despite relying solely on external borrowing for funding.

• Click to explore a detailed breakdown of our findings in IGG's valuation report.

• Examine IGG's past performance report to understand how it has performed in the past.

Where To Now?

• Access the full spectrum of 16 Undervalued SEHK Small Caps With Insider Buying by clicking on this link.

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Contemplating Other Strategies?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.

• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.

• Find companies with promising cash flow potential yet trading below their fair value.

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:799.

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