Undervalued Small Caps In Hong Kong With Insider Action For October 2024

The Hong Kong market has seen a notable uptick recently, driven by China's robust stimulus measures, which have buoyed investor sentiment and lifted key indices. In this favorable economic climate, identifying undervalued small-cap stocks with insider activity can offer promising opportunities for investors. In the context of these market dynamics, a good stock often exhibits strong fundamentals and insider confidence, indicating potential for growth despite broader economic uncertainties.

Top 10 Undervalued Small Caps With Insider Buying In Hong Kong

Name	PE	PS	Discount to Fair Value	Value Rating
Beijing Chunlizhengda Medical Instruments	14.0x	3.1x	49.48%	★★★★★☆
Edianyun	NA	0.6x	38.74%	★★★★★☆
Lion Rock Group	5.4x	0.4x	49.98%	★★★★☆☆
Gemdale Properties and Investment	NA	0.3x	37.05%	★★★★☆☆
Vesync	7.8x	1.2x	-11.52%	★★★☆☆☆
China Lesso Group Holdings	5.8x	0.4x	-503.00%	★★★☆☆☆
Skyworth Group	6.2x	0.1x	-336.67%	★★★☆☆☆
Lee & Man Paper Manufacturing	8.0x	0.5x	-63.29%	★★★☆☆☆
Guangdong Kanghua Healthcare Group	13.8x	0.3x	4.84%	★★★☆☆☆
Emperor International Holdings	NA	0.9x	28.14%	★★★☆☆☆

Click here to see the full list of 12 stocks from our Undervalued SEHK Small Caps With Insider Buying screener.

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

China Lesso Group Holdings (SEHK:2128)

Simply Wall St Value Rating: ★★★☆☆☆

Overview: China Lesso Group Holdings operates primarily in the plastics and rubber industry with a focus on manufacturing and distributing building materials, boasting a market cap of CN¥24.56 billion.

Operations: The company generates revenue primarily from its Plastics & Rubber segment, with a gross profit margin of 26.04%. Operating expenses include significant allocations to sales and marketing, general and administrative expenses, and non-operating costs. Net income margin stands at 6.58%.

PE: 5.8x

China Lesso Group Holdings, a small cap in Hong Kong, recently reported first-half 2024 earnings with sales of CNY 13.56 billion and net income of CNY 1.04 billion, both down from the previous year. Despite this, insider confidence is evident as Luen Hei Wong purchased four million shares worth approximately US$10.05 million between June and August 2024. The company faces higher risk due to reliance on external borrowing but shows potential for growth with forecasted earnings to grow annually by 10.65%.

• Dive into the specifics of China Lesso Group Holdings here with our thorough valuation report.

• Understand China Lesso Group Holdings' track record by examining our Past report.

Lee & Man Paper Manufacturing (SEHK:2314)

Simply Wall St Value Rating: ★★★☆☆☆

Overview: Lee & Man Paper Manufacturing is a company engaged in the production of pulp, tissue paper, and packaging paper with a market cap of approximately HK$21.33 billion.

Operations: The company generates revenue primarily from Packaging Paper, Tissue Paper, and Pulp segments. The net profit margin has shown a decreasing trend over recent periods, reaching 0.05957% by June 30, 2024. Gross profit margin has also fluctuated but was recorded at 0.12486% for the same period.

PE: 8.0x

Lee & Man Paper Manufacturing has seen insider confidence with Ho Chung Lee purchasing 483,000 shares valued at HK$1.10 million, representing a 122% increase in their holdings. Recently, the company declared an interim dividend of HK$0.062 per share for the six months ending June 2024 and reported sales of HK$12.51 billion with net income doubling to HK$805.69 million compared to last year’s HK$359.9 million, indicating potential growth prospects despite higher risk funding sources and debt coverage concerns from operating cash flow.

• Take a closer look at Lee & Man Paper Manufacturing's potential here in our valuation report.

• Explore historical data to track Lee & Man Paper Manufacturing's performance over time in our Past section.

Gemdale Properties and Investment (SEHK:535)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Gemdale Properties and Investment engages in property development, investment, and management operations with a market capitalization of approximately CN¥4.83 billion.

Operations: The company generates revenue primarily from Property Development (CN¥17.26 billion) and Property Investment and Management (CN¥1.23 billion). Gross profit margin has shown significant fluctuations, reaching a high of 41.63% in December 2018 but dropping to -0.03% by June 2023. Operating expenses have varied, with the latest figure at CN¥677.46 million as of June 2024, while non-operating expenses peaked at CN¥3.35 billion during the same period.

PE: -2.1x

Gemdale Properties and Investment has shown significant insider confidence, with Non-Executive Director Lian Huat Loh purchasing 10 million shares for approximately RMB 2.6 million in the past year. Despite earnings declining by 29.5% annually over five years and a net loss of RMB 2,179 million for H1 2024, the company reported strong sales figures: aggregate contracted sales of RMB 12.43 billion from January to August 2024. The stock's volatile share price and high-risk funding sources add complexity to its undervalued status among Hong Kong's smaller companies.

• Click here to discover the nuances of Gemdale Properties and Investment with our detailed analytical valuation report.

• Gain insights into Gemdale Properties and Investment's past trends and performance with our Past report.

Where To Now?

• Dive into all 12 of the Undervalued SEHK Small Caps With Insider Buying we have identified here.
• Have a stake in these businesses? Integrate your holdings into Simply Wall St's portfolio for notifications and detailed stock reports.
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Curious About Other Options?

• 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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