Discovering Undiscovered Gems in Hong Kong for September 2024

As global markets experience turbulence, with key indices like the S&P 500 suffering significant declines and economic indicators showing mixed signals, investors are increasingly looking towards more stable and potentially undervalued opportunities. In this context, the Hong Kong market presents a compelling case for discovering hidden gems, particularly among small-cap stocks that may offer resilience and growth potential amidst broader market volatility. Identifying a good stock in such an environment often involves focusing on companies with strong fundamentals, robust business models, and favorable positioning within their respective sectors.

Top 10 Undiscovered Gems With Strong Fundamentals In Hong Kong

Name	Debt To Equity	Revenue Growth	Earnings Growth	Health Rating
C&D Property Management Group	1.32%	37.15%	41.55%	★★★★★★
PW Medtech Group	0.06%	22.33%	-17.56%	★★★★★★
COSCO SHIPPING International (Hong Kong)	NA	-3.84%	16.33%	★★★★★★
ManpowerGroup Greater China	NA	14.56%	1.58%	★★★★★★
Tianyun International Holdings	10.09%	-5.59%	-9.92%	★★★★★★
Xin Point Holdings	1.77%	10.88%	22.83%	★★★★★☆
Chongqing Machinery & Electric	28.07%	8.82%	11.12%	★★★★★☆
HBM Holdings	52.89%	66.59%	31.70%	★★★★★☆
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 170 stocks from our SEHK Undiscovered Gems With Strong Fundamentals screener.

Here's a peek at a few of the choices from the screener.

Bank of Gansu (SEHK:2139)

Simply Wall St Value Rating: ★★★★★★

Overview: Bank of Gansu Co., Ltd., along with its subsidiary Pingliang Jingning Chengji Rural Bank Co., Ltd., offers a range of banking services in the People's Republic of China and has a market cap of approximately HK$4.07 billion.

Operations: Bank of Gansu generates revenue primarily from retail banking (CN¥2.10 billion) and corporate banking (CN¥1.21 billion), while its financial market operations show a negative contribution (CN¥-368.60 million).

Bank of Gansu, with total assets of CN¥422.2B and equity of CN¥33.6B, offers a compelling profile for investors seeking undervalued opportunities in Hong Kong. The bank's deposits stand at CN¥333.6B against loans totaling CN¥228.0B, highlighting its robust funding base primarily from customer deposits, which are less risky than external borrowing sources. Despite earnings declining by 6.4% annually over the past five years, it maintains an allowance for bad loans at 135%, ensuring adequate coverage for potential defaults. The price-to-earnings ratio is attractively low at 5.9x compared to the Hong Kong market average of 8.8x, suggesting potential value upside despite recent net income figures showing slight year-over-year decreases (CN¥394M vs CN¥408M).

• Click here to discover the nuances of Bank of Gansu with our detailed analytical health report.

• Assess Bank of Gansu's past performance with our detailed historical performance reports.

YesAsia Holdings (SEHK:2209)

Simply Wall St Value Rating: ★★★★★★

Overview: YesAsia Holdings Limited (SEHK:2209) is an investment holding company involved in the procurement, sale, and trading of Asian fashion and lifestyle, beauty, cosmetics, accessories, and entertainment products with a market cap of HK$2.63 billion.

Operations: YesAsia Holdings Limited generates revenue primarily from the sale of fashion, lifestyle, and beauty products (HK$270.65 million) and entertainment products (HK$2.56 million).

YesAsia Holdings, a small-cap player in Hong Kong, reported impressive growth with half-year sales reaching US$163.35 million, up from US$90.66 million last year. Net income surged to US$11.11 million compared to US$1.56 million previously, driven by increased beauty product sales and enhanced marketing efforts on YesStyle Platforms and AsianBeautyWholesale expansion. Basic earnings per share rose to US$0.028 from US$0.0039 a year ago, reflecting robust operational performance and strategic initiatives paying off significantly this period.

• Unlock comprehensive insights into our analysis of YesAsia Holdings stock in this health report.

• Understand YesAsia Holdings' track record by examining our Past report.

Vtech Holdings (SEHK:303)

Simply Wall St Value Rating: ★★★★★★

Overview: Vtech Holdings Limited, with a market cap of HK$12.94 billion, designs, manufactures, and distributes electronic products across Hong Kong, North America, Europe, the Asia Pacific, and internationally.

Operations: Vtech Holdings generates revenue primarily from the design, manufacture, and distribution of consumer electronic products, amounting to $2.15 billion. The company's market cap stands at HK$12.94 billion.

Vtech Holdings, a small-cap gem in Hong Kong, has shown impressive earnings growth of 11.7% over the past year, outpacing the Communications industry’s -14.5%. With no debt on its balance sheet and trading at 33% below estimated fair value, it offers a compelling investment case. The company also approved a final dividend of US$0.48 per share for FY2024, highlighting its commitment to shareholder returns.

• Click here and access our complete health analysis report to understand the dynamics of Vtech Holdings.

• Gain insights into Vtech Holdings' historical performance by reviewing our past performance report.

Key Takeaways

• Click here to access our complete index of 170 SEHK Undiscovered Gems With Strong Fundamentals.
• Got skin in the game with these stocks? Elevate how you manage them by using Simply Wall St's portfolio, where intuitive tools await to help optimize your investment outcomes.
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Contemplating Other Strategies?

• 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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