Undiscovered Gems in Hong Kong for August 2024

The Hong Kong market has experienced a mixed performance recently, with the Hang Seng Index slightly declining by 0.45% amid weak manufacturing data and broader global economic concerns. Despite these challenges, opportunities remain for discerning investors to uncover hidden gems among small-cap stocks that may offer significant growth potential. In such an environment, finding a good stock often involves looking for companies with strong fundamentals, innovative business models, and resilience in the face of economic headwinds.

Top 10 Undiscovered Gems With Strong Fundamentals In Hong Kong

Name	Debt To Equity	Revenue Growth	Earnings Growth	Health Rating
E-Commodities Holdings	23.22%	6.87%	31.81%	★★★★★★
S.A.S. Dragon Holdings	37.35%	4.13%	12.06%	★★★★★★
PW Medtech Group	NA	17.93%	-2.70%	★★★★★★
Tianyun International Holdings	10.09%	-5.59%	-9.92%	★★★★★★
JiaXing Gas Group	17.72%	26.04%	22.07%	★★★★★☆
Xin Point Holdings	2.03%	9.80%	15.04%	★★★★★☆
Changjiu Holdings	14.09%	12.87%	-4.74%	★★★★★☆
Mulsanne Group Holding	186.88%	-12.02%	-43.54%	★★★★☆☆
Time Interconnect Technology	212.50%	27.21%	15.01%	★★★★☆☆
Pizu Group Holdings	48.34%	-4.53%	-19.78%	★★★★☆☆

Click here to see the full list of 174 stocks from our SEHK Undiscovered Gems With Strong Fundamentals screener.

Here we highlight a subset of our preferred stocks from the screener.

Kinetic Development Group (SEHK:1277)

Simply Wall St Value Rating: ★★★★★☆

Overview: Kinetic Development Group Limited, an investment holding company with a market cap of HK$9.53 billion, engages in the extraction and sale of coal products in the People’s Republic of China.

Operations: Kinetic Development Group generates revenue primarily from the extraction and sale of coal products within China. The company's net profit margin has been reported at 15.75%.

Kinetic Development Group, a small-cap player in Hong Kong, has seen its debt to equity ratio drop from 26.6% to 17.6% over the past five years, reflecting improved financial health. Despite negative earnings growth of -22% last year compared to the Oil and Gas industry average of -6.8%, it trades at 25.7% below its estimated fair value. The company’s interest payments are well covered by EBIT at 55.7x coverage, showcasing robust operational efficiency.

• Dive into the specifics of Kinetic Development Group here with our thorough health report.

• Learn about Kinetic Development Group's historical performance.

Scholar Education Group (SEHK:1769)

Simply Wall St Value Rating: ★★★★★★

Overview: Scholar Education Group, an investment holding company, provides K-12 after-school education services in the People’s Republic of China and has a market cap of HK$2.76 billion.

Operations: Scholar Education Group generates revenue primarily from Private Education Services, totaling CN¥570.61 million.

Scholar Education Group, a small player in the Hong Kong education sector, has shown impressive earnings growth of 58% over the past year. Despite this, its earnings have decreased by 8.5% annually over the last five years. The company is currently trading at 73.1% below our fair value estimate and boasts high-quality earnings with no debt on its balance sheet. Revenue is projected to grow by 35.23% per year, indicating strong future potential for investors seeking undervalued opportunities in this sector.

• Unlock comprehensive insights into our analysis of Scholar Education Group stock in this health report.

• Gain insights into Scholar Education Group's historical performance by reviewing our past performance report.

Guoquan Food (Shanghai) (SEHK:2517)

Simply Wall St Value Rating: ★★★★★☆

Overview: Guoquan Food (Shanghai) Co., Ltd. operates as a home meal products company in China with a market cap of HK$9.15 billion.

Operations: Guoquan Food (Shanghai) Co., Ltd. generates revenue primarily from retail sales through grocery stores, amounting to CN¥6.09 billion.

Guoquan Food (Shanghai) has shown promising financial health, with a levered free cash flow of RMB 543.34M as of December 2023, and cash equivalents reaching RMB 1.42B. The company repurchased shares in the latest year, indicating confidence in its stock value. Additionally, Guoquan's earnings growth over the past year outpaced the Consumer Retailing industry average at 4.2%. Recent changes include board appointments and amendments to its Articles of Association to reflect share capital structure adjustments upon H Share Full Circulation completion.

• Click here to discover the nuances of Guoquan Food (Shanghai) with our detailed analytical health report.

• Explore historical data to track Guoquan Food (Shanghai)'s performance over time in our Past section.

Seize The Opportunity

• Embark on your investment journey to our 174 SEHK Undiscovered Gems With Strong Fundamentals selection here.
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Searching for a Fresh Perspective?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.
• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.
• Find companies with promising cash flow potential yet trading below their fair value.

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.

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