As global markets navigate through a period of economic adjustments, the Hong Kong market has shown resilience, with the Hang Seng Index experiencing modest fluctuations amid broader concerns about inflation and economic growth. In this environment, small-cap stocks with insider buying can present unique opportunities for investors seeking value. Identifying undervalued small-cap stocks often involves looking at companies where insiders are purchasing shares, signaling confidence in their future prospects despite current market volatility.
Top 10 Undervalued Small Caps With Insider Buying In Hong Kong
Overview: Lee & Man Paper Manufacturing is a company engaged in the production of packaging paper, tissue paper, and pulp with a market capitalization of HK$22.49 billion.
Operations: The company's revenue streams are primarily derived from packaging paper and tissue paper, with packaging paper contributing the largest share. The cost of goods sold (COGS) significantly impacts gross profit, which has shown variability over time. Notably, the net income margin has experienced fluctuations, reaching a high of 19.51% in December 2017 and a low of 2.67% in June 2023.
PE: 5.8x
Lee & Man Paper Manufacturing, a small cap in Hong Kong, recently saw insider confidence with Ho Chung Lee purchasing 483,000 shares for HK$1.10 million between July and August 2024. The company reported half-year sales of HK$12.51 billion, up from HK$12.21 billion last year, and net income rose to HK$805.69 million from HK$359.9 million a year ago. Despite higher-risk external borrowing as its sole funding source, earnings are forecasted to grow by 5.83% annually.
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 approximately HK$1.64 billion.
Operations: The company generates revenue primarily from Wireless Telecommunications Network System Equipment and Services, which accounted for HK$4941.02 million, and Operator Telecommunication Services at HK$156.22 million. The gross profit margin has shown variability with a recent figure of 0.28178% as of June 2024. Operating expenses consist mainly of Sales & Marketing, R&D, and General & Administrative expenses, reflecting significant cost components impacting net income outcomes over the periods analyzed.
PE: -12.0x
Comba Telecom Systems Holdings, a smaller player in Hong Kong's telecom sector, has seen insider confidence with recent share purchases over the past six months. Despite earnings declining by 1.7% annually over the last five years and a volatile share price in the past three months, insiders have shown faith in its future prospects. The company reported a consolidated loss of HK$160 million for H1 2024 due to delayed network projects and lower other income but remains active in industry events like MWC Shanghai 2024.
Overview: Ferretti is a company engaged in the design, construction, and marketing of yachts and recreational boats with a market cap of €1.19 billion.
Operations: Ferretti generates revenue primarily from the design, construction, and marketing of yachts and recreational boats. For the period ending June 30, 2024, the company reported a gross profit margin of 36.04% on revenues of €1.30 billion. Operating expenses for this period amounted to €360.28 million with general and administrative expenses being a significant component at €263.40 million.
PE: 10.4x
Ferretti, a small cap in Hong Kong, has seen notable insider confidence with significant share purchases over the past six months. Recent executive changes include Mr. Stefano de Vivo's departure and Mr. Jiang Kui's appointment as Chairman of the Board, reflecting strong leadership continuity. The company reported half-year sales of €695.1 million and net income of €43.86 million, showing steady financial performance despite market challenges. Future growth prospects look promising with earnings forecasted to grow 12% annually.
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:2314 SEHK:2342 and SEHK:9638.
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