3 Undervalued Small Caps In Hong Kong With Insider Buying To Watch

The recent rate cut by the Federal Reserve has created a ripple effect across global markets, with Hong Kong's Hang Seng Index gaining 5.12% as investors anticipate further economic stimulus measures. Amid this backdrop, small-cap stocks in Hong Kong are drawing attention for their potential value and insider buying activity. In the current market environment, identifying undervalued small-cap stocks with strong insider confidence can be a promising strategy for investors looking to capitalize on growth opportunities.

Top 5 Undervalued Small Caps With Insider Buying In Hong Kong

Name	PE	PS	Discount to Fair Value	Value Rating
Shanghai Chicmax Cosmetic	16.3x	2.0x	-140.07%	★★★★☆☆
Analogue Holdings	14.2x	0.2x	37.86%	★★★☆☆☆
Jinke Smart Services Group	NA	0.8x	45.99%	★★★☆☆☆
Skyworth Group	5.3x	0.1x	-269.11%	★★★☆☆☆
Lee & Man Paper Manufacturing	6.2x	0.4x	-27.59%	★★★☆☆☆

Click here to see the full list of 5 stocks from our Undervalued SEHK Small Caps With Insider Buying screener.

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

Shanghai Chicmax Cosmetic (SEHK:2145)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Shanghai Chicmax Cosmetic is a company engaged in the manufacture and sale of cosmetic products, with a market cap of CN¥5.87 billion.

Operations: The company generates revenue primarily from the manufacture and sale of cosmetic products, with its gross profit margin reaching up to 74.96% in recent periods. Operating expenses are significant, driven mainly by sales and marketing costs, which have been as high as CN¥3.41 billion.

PE: 16.3x

Shanghai Chicmax Cosmetic, a small cap stock in Hong Kong, has shown significant growth potential. For the half year ended June 30, 2024, the company reported sales of CNY 3.5 billion and net income of CNY 401.2 million, up from CNY 1.6 billion and CNY 101 million respectively a year ago. Insider confidence is evident with recent share purchases by executives between July and September this year. The proposed interim dividend of RMB 0.75 per share further underscores their strong financial health heading into their Extraordinary General Meeting on September 30th to amend company bylaws.

• Unlock comprehensive insights into our analysis of Shanghai Chicmax Cosmetic stock in this valuation report.

• Explore historical data to track Shanghai Chicmax Cosmetic's performance over time in our Past section.

Lee & Man Paper Manufacturing (SEHK:2314)

Simply Wall St Value Rating: ★★★☆☆☆

Overview: Lee & Man Paper Manufacturing is a leading producer of packaging paper, tissue paper, and pulp with a market capitalization of approximately HK$22.20 billion.

Operations: The company generates revenue from three primary segments: Packaging Paper, Tissue Paper, and Pulp. Over recent periods, the net profit margin has shown a downward trend, reaching 2.67% in June 2023 from a high of 19.51% in December 2017. The cost of goods sold (COGS) consistently represents the largest expense, significantly impacting gross profit margins which have also declined to 7.72% by June 2023 from peaks above 29%.

PE: 6.2x

Lee & Man Paper Manufacturing has shown significant insider confidence, with Ho Chung Lee purchasing 483,000 shares worth HK$1.10 million, increasing their holdings by 122% in recent months. The company reported a notable rise in net income to HK$805.69 million for the half-year ended June 30, 2024, compared to HK$359.9 million a year ago. Additionally, an interim dividend of HK$0.062 per share was declared for the same period and paid on September 5, 2024.

• Delve into the full analysis valuation report here for a deeper understanding of Lee & Man Paper Manufacturing.

• Gain insights into Lee & Man Paper Manufacturing's past trends and performance with our Past report.

Skyworth Group (SEHK:751)

Simply Wall St Value Rating: ★★★☆☆☆

Overview: Skyworth Group is a diversified company engaged in smart household appliances, smart systems technology, modern services, and new energy businesses with a market cap of approximately CN¥6.94 billion.

Operations: The company's revenue streams primarily come from its Smart Household Appliances Business (CN¥32.51 billion), New Energy Business (CN¥20.21 billion), Smart Systems Technology Business (CN¥9.84 billion), and Modern Services and Others (CN¥5.80 billion). The gross profit margin has shown variability, with a recent figure of 14.36%.

PE: 5.3x

Skyworth Group, a small-cap stock in Hong Kong, recently reported earnings for the half-year ending June 30, 2024. Sales rose to ¥265 million from ¥252 million year-over-year, while net income increased to ¥384 million from ¥302 million. CEO and Executive Director Chi Shi demonstrated insider confidence by purchasing 2.19 million shares worth approximately HK$6.3 million between August and September 2024. Additionally, Skyworth's strategic expansion into the Russian market showcases their commitment to innovation and growth potential in new regions.

• Click here and access our complete valuation analysis report to understand the dynamics of Skyworth Group.

• Examine Skyworth Group's past performance report to understand how it has performed in the past.

Where To Now?

• Delve into our full catalog of 5 Undervalued SEHK Small Caps With Insider Buying here.
• Invested in any of these stocks? Simplify your portfolio management with Simply Wall St and stay ahead with our alerts for any critical updates on your stocks.
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Ready For A Different Approach?

• 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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