Exploring 3 Top Undervalued Small Caps In Hong Kong With Insider Action

In recent weeks, the Hong Kong market has shown resilience amid global economic uncertainties, with the Hang Seng Index gaining 0.85% despite broader concerns about deflationary pressures in China. This backdrop sets the stage for investors to explore opportunities in small-cap stocks, which can often be overlooked during times of market volatility. Identifying a good stock in such an environment involves looking at companies with strong fundamentals and potential for growth, especially those that have seen insider buying—a signal that company executives are confident about their future prospects.

Top 10 Undervalued Small Caps With Insider Buying In Hong Kong

Name	PE	PS	Discount to Fair Value	Value Rating
Ever Sunshine Services Group	5.5x	0.4x	26.44%	★★★★★☆
Lee & Man Paper Manufacturing	6.4x	0.4x	38.24%	★★★★★☆
K. Wah International Holdings	6.8x	0.9x	29.21%	★★★★☆☆
Kinetic Development Group	4.4x	1.9x	22.57%	★★★★☆☆
Wasion Holdings	11.2x	0.8x	41.30%	★★★☆☆☆
Shanghai Chicmax Cosmetic	26.7x	2.9x	0.04%	★★★☆☆☆
Skyworth Group	5.2x	0.1x	-235.44%	★★★☆☆☆
EVA Precision Industrial Holdings	4.8x	0.2x	8.96%	★★★☆☆☆
China Leon Inspection Holding	9.8x	0.7x	36.52%	★★★☆☆☆
Truly International Holdings	11.9x	0.2x	40.57%	★★★☆☆☆

Click here to see the full list of 13 stocks from our Undervalued SEHK Small Caps With Insider Buying screener.

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

Kinetic Development Group (SEHK:1277)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Kinetic Development Group is a company engaged in property development and investment, with a market cap of CN¥4.56 billion.

Operations: Kinetic Development Group generates revenue primarily from sales, with significant costs attributed to COGS and operating expenses. The company's net income margin has shown a positive trend, reaching 43.79% as of December 2023.

PE: 4.4x

Kinetic Development Group, a small cap in Hong Kong, recently declared a special dividend of HK$0.04 per share, with payment set for September 9, 2024. They have primarily low-risk funding but rely solely on external borrowing. Insider confidence is evident with significant share purchases over the past six months. This combination of dividends and insider buying suggests potential for future growth despite their higher-risk funding structure.

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

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

Comba Telecom Systems Holdings (SEHK:2342)

Simply Wall St Value Rating: ★★★★☆☆

Overview: Comba Telecom Systems Holdings specializes in providing telecommunication services and wireless telecommunications network system equipment and services, with a market cap of approximately HK$1.92 billion.

Operations: The company's primary revenue streams are from Wireless Telecommunications Network System Equipment and Services (HK$5824.14 million) and Operator Telecommunication Services (HK$157.83 million). The gross profit margin peaked at 30.73% in Q4 2019 before fluctuating, ending at 27.79% in Q4 2023. Net income showed significant variability, with notable losses in several periods but achieving a peak net income margin of 3.24% in Q2 2023.

PE: 352.7x

Comba Telecom Systems Holdings, a small cap in Hong Kong, has recently experienced insider confidence with Tung Ling Fok purchasing 1.83 million shares for HK$930,371. The company expects a consolidated loss of up to HK$160 million for the first half of 2024 due to delayed network projects and fair value losses on equity investments. Despite these challenges, the company initiated a share repurchase program in June 2024 to enhance net assets per share and earnings per share.

• Click to explore a detailed breakdown of our findings in Comba Telecom Systems Holdings' valuation report.

• Explore historical data to track Comba Telecom Systems Holdings' performance over time in our Past section.

Wasion Holdings (SEHK:3393)

Simply Wall St Value Rating: ★★★☆☆☆

Overview: Wasion Holdings specializes in advanced metering infrastructure and distribution operations, with a market cap of approximately CN¥3.80 billion.

Operations: The company generates revenue primarily from Advanced Distribution Operations, Power Advanced Metering Infrastructure, and Communication and Fluid Advanced Metering Infrastructure. For the period ending 2023-12-31, it reported a gross profit margin of 35.59%.

PE: 11.2x

Wasion Holdings has garnered attention as an undervalued small cap in Hong Kong, with recent insider confidence shown by Founder and Executive Chairman Wei Ji purchasing 500,000 shares worth approximately HKD 3.17 million in July 2024. This move signals strong belief in the company's potential. Additionally, Wasion's subsidiaries secured significant smart meter contracts in Hungary (EUR 31.62 million), Singapore (USD 9.42 million), and Malaysia (USD 5.74 million) between May and July of this year, indicating robust demand for its products internationally and supporting future revenue growth projections of around 25.8% per year despite reliance on higher-risk external borrowing for funding.

• Dive into the specifics of Wasion Holdings here with our thorough valuation report.

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

Make It Happen

• Click this link to deep-dive into the 13 companies within our Undervalued SEHK Small Caps With Insider Buying screener.
• Have you diversified into these companies? Leverage the power of Simply Wall St's portfolio to keep a close eye on market movements affecting your investments.
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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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