Hong Kong's Undervalued Small Caps With Insider Action In October 2024

Simply Wall St · 10/17 23:00

In recent weeks, Hong Kong's market has experienced significant volatility, with the Hang Seng Index witnessing a notable decline amid wavering optimism about Beijing's stimulus measures. This environment presents potential opportunities for discerning investors interested in small-cap stocks that might be overlooked by broader market trends. Identifying promising small caps often involves looking at companies with strong fundamentals and insider activity, which can signal confidence from those closest to the business.

Top 10 Undervalued Small Caps With Insider Buying In Hong Kong

Name PE PS Discount to Fair Value Value Rating
Edianyun NA 0.6x 40.07% ★★★★★☆
Vesync 7.0x 1.0x -1.50% ★★★★☆☆
Cheerwin Group 10.8x 1.4x 48.80% ★★★★☆☆
Lion Rock Group 5.5x 0.4x 49.29% ★★★★☆☆
Ferretti 11.0x 0.7x 46.32% ★★★★☆☆
Gemdale Properties and Investment NA 0.2x 48.71% ★★★★☆☆
China Lesso Group Holdings 5.6x 0.4x -485.51% ★★★☆☆☆
Skyworth Group 5.5x 0.1x -283.37% ★★★☆☆☆
Lee & Man Paper Manufacturing 6.8x 0.4x -38.71% ★★★☆☆☆
Emperor International Holdings NA 0.9x 26.84% ★★★☆☆☆

Click here to see the full list of 11 stocks from our Undervalued SEHK Small Caps With Insider Buying screener.

Underneath we present a selection of stocks filtered out by our screen.

Vesync (SEHK:2148)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Vesync is a company engaged in the design, development, and sale of smart home appliances and tools with a market cap of HK$3.50 billion.

Operations: Revenue for the company has grown significantly over time, with a notable gross profit margin reaching 48.46% as of October 2024. The cost of goods sold (COGS) is a major expense, amounting to $311.70 million against a revenue of $604.75 million in the same period. Operating expenses, including sales and marketing and general administrative costs, also contribute substantially to total expenditures.

PE: 7.0x

Vesync, a Hong Kong-based company, has recently been added to the S&P Global BMI Index, reflecting its growing recognition. The company reported a significant increase in net income for the first half of 2024, reaching US$44.86 million from US$32.62 million the previous year. Insider confidence is evident as Zhaojun Chen purchased 200,000 shares for approximately HK$828,979 between August and October 2024. Despite relying on higher-risk external borrowing for funding, Vesync's earnings are projected to grow annually by 6.61%.

SEHK:2148 Ownership Breakdown as at Oct 2024
SEHK:2148 Ownership Breakdown as at Oct 2024

Cheerwin Group (SEHK:6601)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Cheerwin Group is a company engaged in the production and distribution of personal care, household care, and pet products, with a market cap of CN¥5.02 billion.

Operations: Cheerwin Group's primary revenue streams are derived from Household Care, Pets and Pet Products, and Personal Care segments. The company has experienced fluctuations in its net income margin, with a notable increase to 12.59% as of October 2024. Operating expenses are significantly influenced by sales and marketing costs, which have consistently been the largest component.

PE: 10.8x

Cheerwin Group, a player in Hong Kong's small cap market, reported sales of CNY 1.25 billion for the first half of 2024, up from CNY 1.13 billion last year. Net income rose to CNY 179 million from CNY 137 million. Insider confidence is evident with recent share purchases, indicating potential optimism about future prospects despite reliance on external borrowing for funding. The company declared an interim dividend of RMB 0.0538 per share, reflecting a commitment to shareholder returns amidst leadership changes and strategic shifts.

SEHK:6601 Share price vs Value as at Oct 2024
SEHK:6601 Share price vs Value as at Oct 2024

Ferretti (SEHK:9638)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Ferretti is engaged in the design, construction, and marketing of yachts and recreational boats with a market capitalization of €1.87 billion.

Operations: The company generates revenue primarily from the design, construction, and marketing of yachts and recreational boats, with recent revenue figures reaching €1.30 billion. The gross profit margin has shown variability over time, recently recorded at 36.04%. Operating expenses are significant within the cost structure, including notable general and administrative costs.

PE: 11.0x

Ferretti, a Hong Kong-listed company, has experienced significant changes recently. Despite being dropped from the S&P Global BMI Index in September 2024, insider confidence is evident with share purchases throughout the year. The company's half-year earnings report showed sales of €695 million and net income of €44 million, reflecting steady growth. Leadership transitions include Mr. Jiang Kui as Chairman and new appointments in key roles to strengthen governance. Earnings are projected to grow by 12.8% annually, suggesting potential for future value realization amidst its current market positioning.

SEHK:9638 Share price vs Value as at Oct 2024
SEHK:9638 Share price vs Value as at Oct 2024

Turning Ideas Into Actions

Interested In Other Possibilities?

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.