As global markets continue to navigate a complex economic landscape, the Hong Kong market has shown resilience with the Hang Seng Index rising by 1.99%. Amid this backdrop, identifying undervalued stocks presents an intriguing opportunity for investors looking to capitalize on potential growth. In this article, we will explore Innovent Biologics and two other SEHK stocks that are currently trading below their estimated value.

Top 10 Undervalued Stocks Based On Cash Flows In Hong Kong

Click here to see the full list of 33 stocks from our Undervalued SEHK Stocks Based On Cash Flows screener.

We'll examine a selection from our screener results.

Innovent Biologics

Overview: Innovent Biologics, Inc. is a biopharmaceutical company that develops and commercializes monoclonal antibodies and other drug assets for oncology, ophthalmology, autoimmune, cardiovascular, and metabolic diseases in China with a market cap of HK$71.61 billion.

Operations: The company generates revenue of CN￥6.21 billion from its biotechnology segment.

Estimated Discount To Fair Value: 33.9%

Innovent Biologics is trading at HK$43.95, significantly below its estimated fair value of HK$66.52, suggesting it may be undervalued based on cash flows. Despite recent shareholder dilution, analysts forecast a 50.78% annual earnings growth and expect the company to become profitable within three years. Innovent's revenue is projected to grow at 21.2% per year, outpacing the Hong Kong market average of 7.4%. Recent approval for Dupert? (fulzerasib) in China could bolster future cash flows by addressing unmet medical needs in advanced NSCLC patients with KRAS G12C mutations.

• The analysis detailed in our Innovent Biologics growth report hints at robust future financial performance.

• Take a closer look at Innovent Biologics' balance sheet health here in our report.

Sunny Optical Technology (Group)

Overview: Sunny Optical Technology (Group) Company Limited designs, researches, develops, manufactures, and sells optical products and scientific instruments with a market cap of HK$53.09 billion.

Operations: Sunny Optical Technology (Group) generates revenue from three main segments: CN￥12.32 billion from Optical Components, CN￥0.59 billion from Optical Instruments, and CN￥25.10 billion from Optoelectronic Products.

Estimated Discount To Fair Value: 16.9%

Sunny Optical Technology (Group) reported robust earnings for H1 2024, with sales reaching CNY 18.86 billion and net income rising to CNY 1.08 billion, driven by a recovery in the smartphone market and improved product mix. Trading at HK$48.5, the stock is undervalued against its fair value estimate of HK$58.33, offering potential based on cash flows. Analysts forecast significant annual earnings growth of over 20%, outpacing the Hong Kong market average.

• Our expertly prepared growth report on Sunny Optical Technology (Group) implies its future financial outlook may be stronger than recent results.

• Delve into the full analysis health report here for a deeper understanding of Sunny Optical Technology (Group).

Global New Material International Holdings

Overview: Global New Material International Holdings Limited (SEHK:6616) is an investment holding company that produces and sells pearlescent pigment, functional mica filler, and related products in China and internationally, with a market cap of HK$4.81 billion.

Operations: The company's revenue segments include CN￥961.34 million from its PRC Business Operation and CN￥103.11 million from its Korea Business Operation.

Estimated Discount To Fair Value: 35.2%

Global New Material International Holdings is trading at HK$3.88, significantly below its estimated fair value of HK$5.99, suggesting it may be undervalued based on cash flows. Despite a decline in profit margins from 24.4% to 17.1%, the company's revenue and earnings are forecast to grow at 20.7% and 22.29% per year respectively, outpacing the Hong Kong market averages of 7.4% and 10.9%. However, its return on equity is projected to remain low at 7.7%.

• Our earnings growth report unveils the potential for significant increases in Global New Material International Holdings' future results.

• Click here and access our complete balance sheet health report to understand the dynamics of Global New Material International Holdings.

Taking Advantage

• Access the full spectrum of 33 Undervalued SEHK Stocks Based On Cash Flows by clicking on this link.

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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:1801 SEHK:2382 and SEHK:6616.

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