As global markets react to the Federal Reserve's anticipated interest rate cuts, Hong Kong's Hang Seng Index has shown resilience, advancing despite cautious sentiment. In this context, identifying undervalued stocks becomes crucial for investors seeking potential growth opportunities. In this article, we will explore Best Pacific International Holdings and two other value stocks on the SEHK that may offer promising prospects.
Top 10 Undervalued Stocks Based On Cash Flows In Hong Kong
Overview: Best Pacific International Holdings Limited, with a market cap of HK$2.42 billion, manufactures, trades in, and sells elastic fabric, elastic webbing, and lace through its subsidiaries.
Operations: The company's revenue segments include HK$834.34 million from the manufacturing and trading of elastic webbing and HK$3.37 billion from the manufacturing and trading of elastic fabric and lace.
Estimated Discount To Fair Value: 46.4%
Best Pacific International Holdings is trading at HK$2.33, significantly below its estimated fair value of HK$4.34, indicating it is undervalued based on discounted cash flows. The company’s earnings are forecast to grow 24.29% annually over the next three years, outpacing the Hong Kong market's growth rate of 10.9%. Recent unaudited guidance projects a net profit of at least HKD 260 million for HY 2024, reflecting a substantial increase from HY 2023’s HKD 138.6 million.
Overview: Chervon Holdings Limited, with a market cap of HK$9.34 billion, is involved in the research, development, manufacture, testing, sale, and after-sale servicing of power tools and outdoor power equipment across North America, Europe, China, and internationally.
Operations: Chervon Holdings Limited generates revenue primarily from power tools ($548.54 million) and outdoor power equipment ($811.41 million).
Estimated Discount To Fair Value: 48.9%
Chervon Holdings is trading at HK$18.28, significantly below its estimated fair value of HK$35.74, suggesting it is undervalued based on discounted cash flows. The company forecasts annual revenue growth of 14.3%, outpacing the Hong Kong market's 7.4%. Recent guidance projects a net profit between US$60 million and US$65 million for HY 2024, driven by increased sales volume, effective promotions, and operational efficiencies. However, its return on equity is forecast to be modest at 12.3% in three years.
Overview: Hangzhou SF Intra-city Industrial Co., Ltd. is an investment holding company that offers intra-city on-demand delivery services in the People’s Republic of China, with a market cap of HK$16.34 billion.
Operations: The company's revenue primarily comes from its intra-city on-demand delivery service business, which generated CN¥12.39 billion.
Estimated Discount To Fair Value: 22.1%
Hangzhou SF Intra-city Industrial is trading at HK$11, 22.1% below its estimated fair value of HK$14.11, indicating it is undervalued based on discounted cash flows. The company expects annual earnings growth of 50.4%, significantly outpacing the Hong Kong market's 10.9%. Recent guidance highlights a net profit increase of over 80% for HY 2024, driven by enhanced operating efficiency and expanded order volume, despite past shareholder dilution and modest future return on equity forecasts (10.8%).
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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.
Companies discussed in this article include SEHK:2111 SEHK:2285 and SEHK:9699.
