As global markets react to anticipated rate cuts by the Federal Reserve, small-cap stocks have been outperforming their larger counterparts, driven by renewed investor optimism. In Hong Kong, this sentiment has created a fertile ground for identifying undervalued small-cap opportunities with insider buying. A good stock in this environment often combines strong fundamentals with favorable market conditions and insider confidence, making it an attractive prospect for investors seeking value amidst broader market movements.
Top 10 Undervalued Small Caps With Insider Buying In Hong Kong
Overview: Comba Telecom Systems Holdings specializes in providing wireless telecommunications network system equipment and services, as well as operator telecommunication services, with a market cap of HK$2.64 billion.
Operations: The company generates revenue primarily from Wireless Telecommunications Network System Equipment and Services (HK$5824.14 million) and Operator Telecommunication Services (HK$157.83 million). The gross profit margin has shown fluctuations, reaching as high as 30.73% in Q4 2019 before declining to 27.79% in Q4 2023. Operating expenses are significant, with consistent allocations towards sales & marketing, R&D, and general & administrative expenses impacting net income margins over the periods analyzed.
PE: 422.4x
Comba Telecom Systems Holdings, a small-cap stock in Hong Kong, has recently experienced significant insider confidence with Tung Ling Fok purchasing 1.83 million shares valued at HK$930,371. Despite reporting an expected loss of up to HK$160 million for H1 2024 due to delayed network projects and lower other income, the company is actively repurchasing shares under a mandate to enhance net assets per share. The upcoming interim results announcement on August 22 may provide further insights into their financial health and strategic direction.
Overview: Skyworth Group is a diversified technology company specializing in smart household appliances, smart systems technology, modern services, and new energy solutions with a market cap of approximately CN￥11.78 billion.
Operations: The company generates revenue primarily from Smart Household Appliances, New Energy Business, Smart Systems Technology Business, and Modern Services. Over recent periods, the gross profit margin has shown variability with the latest figure at 13.80%. Operating expenses are a significant cost component, including sales & marketing and R&D expenses.
PE: 5.4x
Skyworth Group's recent expansion into the Russian market, showcasing products like the BM series and Frame+ TV, highlights its commitment to innovation and quality. Insider confidence is evident with Chi Shi purchasing 2.19 million shares valued at HK$6.30 million, reflecting a 16.52% increase in their holdings. Additionally, the company commenced a share repurchase program on June 4, 2024, authorized to buy back up to 236 million shares. Earnings are projected to grow by 13.31% annually despite reliance on external borrowing for funding.
Overview: Ferretti is a company engaged in the design, construction, and marketing of yachts and recreational boats with a market cap of approximately €1.29 billion.
Operations: The company generates revenue primarily from the design, construction, and marketing of yachts and recreational boats, amounting to €1.23 billion. For the period ending December 31, 2023, it reported a gross profit margin of 37.08%.
PE: 11.1x
Ferretti, a small cap in Hong Kong, is gaining attention due to its high-quality earnings and forecasted annual profit growth of 12.35%. The company recently appointed Mr. Qinggui Hao as joint company secretary, bringing extensive experience from Weichai Power and Shandong Heavy Industry Group. Despite relying solely on external borrowing for funding, the firm shows insider confidence with recent share purchases by executives over the past six months. These factors suggest potential for future value growth amidst industry changes.
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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:2342 SEHK:751 and SEHK:9638.
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