Exploring Undervalued Small Caps With Insider Action In Hong Kong July 2024

Amid a backdrop of fluctuating global markets and deepening trade tensions, Hong Kong's small-cap stocks present a landscape ripe for exploration. As investors increasingly turn to value shares, identifying undervalued small caps with insider action could offer intriguing opportunities in this dynamic environment.

Top 10 Undervalued Small Caps With Insider Buying In Hong Kong

Name	PE	PS	Discount to Fair Value	Value Rating
Ferretti	11.5x	0.8x	44.61%	★★★★★☆
China Overseas Grand Oceans Group	2.4x	0.1x	12.14%	★★★★★☆
Ever Sunshine Services Group	5.6x	0.4x	22.31%	★★★★★☆
Wasion Holdings	11.1x	0.8x	34.01%	★★★★☆☆
China Leon Inspection Holding	9.6x	0.7x	28.80%	★★★★☆☆
Nissin Foods	14.5x	1.3x	41.03%	★★★★☆☆
Transport International Holdings	11.7x	0.6x	43.89%	★★★★☆☆
Skyworth Group	5.5x	0.1x	-303.49%	★★★☆☆☆
Kinetic Development Group	4.0x	1.8x	18.76%	★★★☆☆☆
Shenzhen International Holdings	8.0x	0.7x	13.76%	★★★☆☆☆

Click here to see the full list of 16 stocks from our Undervalued SEHK Small Caps With Insider Buying screener.

Underneath we present a selection of stocks filtered out by our screen.

Kinetic Development Group (SEHK:1277)

Simply Wall St Value Rating: ★★★☆☆☆

Overview: Kinetic Development Group is a company primarily engaged in the property development and investment sectors with a market capitalization of approximately CN¥1.23 billion.

Operations: The company has seen a notable increase in gross profit margin, rising from 9.05% in September 2013 to 59.07% by July 2024, reflecting improved operational efficiency and cost management. Over the same period, revenue grew from CN¥102.90 million to CN¥4745.07 million, indicating significant expansion and increased market presence.

PE: 4.0x

Kinetic Development Group, reflecting a strategic stance in the Hong Kong market, recently saw insider confidence with significant share purchases, signaling strong belief in the company's prospects. Despite a challenging environment marked by a dividend decrease to HK$0.05 on May 7, 2024, and changes in corporate governance structures the same day, insiders have demonstrated their commitment. The firm operates without customer deposits; its liabilities stem entirely from external borrowings—deemed higher risk but potentially rewarding for discerning investors looking for growth avenues within lesser-known entities.

• Click to explore a detailed breakdown of our findings in Kinetic Development Group's valuation report.

• Gain insights into Kinetic Development Group's past trends and performance with our Past report.

Shenzhen International Holdings (SEHK:152)

Simply Wall St Value Rating: ★★★☆☆☆

Overview: Shenzhen International Holdings operates primarily in logistics, including parks and services, port-related services, and toll roads, with a significant focus on environmental protection business.

Operations: The company generates significant revenue from its diverse logistics and related services, with notable segments including Logistic Parks and Port Services contributing HK$1.52 billion and HK$2.80 billion respectively, while its largest segment, Toll Roads and General-Environmental Protection Business, brings in over HK$10.32 billion. The firm has seen a gross profit margin trend upwards to 0.37% as of the latest report, indicating an increasing efficiency in managing cost of goods sold relative to revenue.

PE: 8.0x

Shenzhen International Holdings, a lesser-known entity in Hong Kong's market, recently saw significant insider confidence with Zhengyu Liu acquiring 693,000 shares. This move underscores a robust belief in the company's prospects amidst its strategic expansions and dividend enhancements. Notably, the firm is involved in substantial infrastructure projects like the Jihe Expressway expansion, promising enhanced connectivity and economic synergy within the Greater Bay Area. These developments could signal unrecognized potential for growth and reflect positively on its financial health.

• Delve into the full analysis valuation report here for a deeper understanding of Shenzhen International Holdings.

• Learn about Shenzhen International Holdings' historical performance.

Wasion Holdings (SEHK:3393)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Wasion Holdings is a company that specializes in the production of advanced metering products and solutions, with business segments including power advanced metering infrastructure, communication and fluid advanced metering infrastructure, and advanced distribution operations.

Operations: Wasion Holdings generates its revenue primarily through three key segments: Advanced Distribution Operations, Power Advanced Metering Infrastructure, and Communication and Fluid Advanced Metering Infrastructure, with respective revenues of CN¥2.48 billion, CN¥2.67 billion, and CN¥2.21 billion. The company has seen a gross profit margin increase from 34.51% to 35.59% over the observed periods.

PE: 11.1x

Recently, Wasion Holdings Limited demonstrated insider confidence as Executive Chairman Wei Ji acquired 500,000 shares, signaling strong belief in the company's prospects. This move coincides with a robust earnings forecast, expecting growth of approximately 26% annually. Additionally, the firm's decision to increase dividends to HK$0.28 per share as announced on May 10 reflects its healthy financial stance and commitment to shareholder returns. These actions collectively underscore Wasion’s potential in an underappreciated market segment within Hong Kong’s dynamic economic landscape.

• Unlock comprehensive insights into our analysis of Wasion Holdings stock in this valuation report.

• Examine Wasion Holdings' past performance report to understand how it has performed in the past.

Where To Now?

• Reveal the 16 hidden gems among our Undervalued SEHK Small Caps With Insider Buying screener with a single click here.
• Are these companies part of your investment strategy? Use Simply Wall St to consolidate your holdings into a portfolio and gain insights with our comprehensive analysis tools.
• Join a community of smart investors by using Simply Wall St. It's free and delivers expert-level analysis on worldwide markets.

Looking For Alternative Opportunities?

• 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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