As global markets face economic uncertainties and mixed performances, the Hong Kong market has not been immune to these challenges. The Hang Seng Index recently experienced a decline, reflecting investor caution amid weaker corporate earnings and economic data. In such volatile conditions, identifying undervalued stocks can be particularly advantageous for investors seeking value opportunities. Here are three SEHK value picks that could be considered undervalued in September 2024.

Top 10 Undervalued Stocks Based On Cash Flows In Hong Kong

Click here to see the full list of 37 stocks from our Undervalued SEHK Stocks Based On Cash Flows screener.

We're going to check out a few of the best picks from our screener tool.

Innovent Biologics

Overview: Innovent Biologics, Inc. is a biopharmaceutical company that develops and commercializes monoclonal antibodies and other drug assets in oncology, ophthalmology, autoimmune, cardiovascular, and metabolic diseases in China with a market cap of HK$70.30 billion.

Operations: The company's biotechnology segment generated CN￥7.46 billion in revenue.

Estimated Discount To Fair Value: 46.3%

Innovent Biologics is trading at HK$43.15, significantly below its estimated fair value of HK$80.42, indicating potential undervaluation based on cash flows. Despite a net loss of CNY 392.62 million for the first half of 2024, revenue grew to CNY 3.95 billion from CNY 2.70 billion year-over-year. The company is expected to become profitable within three years and has recently received approval for Dupert?, a KRAS G12C inhibitor for NSCLC treatment in China, enhancing its growth prospects.

• The growth report we've compiled suggests that Innovent Biologics' future prospects could be on the up.

• Dive into the specifics of Innovent Biologics here with our thorough financial health report.

Sunny Optical Technology (Group)

Overview: Sunny Optical Technology (Group) Company Limited, with a market cap of HK$52.43 billion, is involved in designing, researching, developing, manufacturing, and selling optical and optical-related products as well as scientific instruments.

Operations: Sunny Optical's revenue segments include 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: 10.1%

Sunny Optical Technology (Group) reported a significant increase in net income to CNY 1.08 billion for H1 2024 from CNY 436.71 million a year ago, driven by improved product mix and higher average selling prices. The stock is trading at HK$47.90, below its estimated fair value of HK$53.28, suggesting potential undervaluation based on cash flows. Revenue is forecast to grow faster than the Hong Kong market at 10.2% annually, with earnings expected to rise significantly over the next three years.

• Insights from our recent growth report point to a promising forecast for Sunny Optical Technology (Group)'s business outlook.

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

Digital China Holdings

Overview: Digital China Holdings Limited (SEHK:861) is an investment holding company that offers big data products and solutions to government and enterprise customers mainly in Mainland China, with a market cap of HK$5.44 billion.

Operations: The company's revenue segments include Big Data Products and Solutions (CN￥3.39 billion), Software and Operating Services (CN￥5.31 billion), and Traditional and Localization Services (CN￥10.03 billion).

Estimated Discount To Fair Value: 47.1%

Digital China Holdings is trading at HK$3.25, significantly below its estimated fair value of HK$6.15, indicating potential undervaluation based on cash flows. Despite a forecasted annual earnings growth of 59.26%, recent results showed a decline in net income to CNY 10.81 million for H1 2024 from CNY 40.36 million a year ago due to heightened competition and increased expenses from new product investments by its subsidiary, DCITS.

• According our earnings growth report, there's an indication that Digital China Holdings might be ready to expand.

• Unlock comprehensive insights into our analysis of Digital China Holdings stock in this financial health report.

Next Steps

• Investigate our full lineup of 37 Undervalued SEHK Stocks Based On Cash Flows right here.

• Have you diversified into these companies? Leverage the power of Simply Wall St's portfolio to keep a close eye on market movements affecting your investments.

• Elevate your portfolio with Simply Wall St, the ultimate app for investors seeking global market coverage.

Ready For A Different Approach?

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

• Diversify your portfolio with solid dividend payers offering reliable income streams to weather potential market turbulence.

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

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:861.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]