Mobvista leads the trio of SEHK stocks whose estimates are below their intrinsic value

Amid a generally subdued global market landscape, the Hong Kong stock market has faced a number of challenges, with the Hang Seng Index seeing a significant decline of late. This environment potentially presents investors with an opportunity to consider stocks that could be considered undervalued relative to their intrinsic value. When assessing what makes a good stock investment, particularly in these conditions, it is crucial to look for companies with solid fundamentals and potential resilience to sustained economic pressures. These characteristics can make such stocks compelling considerations for those looking to invest in a market poised for an eventual recovery.

Top 10 undervalued stocks in Hong Kong based on cash flows

Click here to see the full list of 42 stocks from our Undervalued SEHK Stocks Based on Cash Flows screener.

Below we present some of our favorites from our exclusive screener

Overview: Mobvista Inc. operates globally and provides advertising and marketing technology services to improve the mobile Internet ecosystem with a market capitalization of approximately HK$3.77 billion.

Operations: The company generates its revenue primarily in two segments: Marketing Technology Business with $16.26 million and Advertising Technology Services with $1.09 billion.

Estimated discount to fair value: 34.5%

Mobvista is trading at HK$2.52 below its estimated fair value of HK$3.85, indicating a potential undervaluation based on a discounted cash flow analysis. Despite a projected revenue growth rate of 15.6% per year, outpacing the Hong Kong market at 7.8%, return on equity is expected to remain low at 14.3%. Earnings are expected to grow at 23.9% annually, outperforming the market average of 11.3%. Recent financials show a significant increase in revenue and net profit in Q1 2024 compared to the previous year.

Overview: Everest Medicines Limited is a biopharmaceutical company focused on the discovery, licensing, development and commercialization of therapeutic and vaccine solutions for unmet medical needs in Greater China and other Asia Pacific regions and has a market capitalization of approximately HK$6.28 billion.

Operations: The company’s sales in the pharmaceutical sector totaled CNY 125.93 million.

Estimated discount to fair value: 20.7%

Everest Medicines appears to be undervalued at a current price of HK$19.58, as it trades 20.7% below its calculated fair value of HK$24.68. The company is poised for significant growth, with revenue expected to grow 38.6% annually, outpacing the Hong Kong market average of 7.8%. Despite this rapid growth and a forecast to become profitable within three years, concerns remain due to share dilution over the past year and a low forecast return on equity of 1.3%.

Overview: Giant Biogene Holding Co., Ltd. is an investment holding company specializing in the research, development, manufacture and sale of beauty and health products based on bioactive materials in the People’s Republic of China and has a market capitalization of approximately HK$46.27 billion.

Operations: The company’s turnover amounts to 3.52 billion Chinese yen (approximately 121 million euros) and consists mainly of the biotechnology segment.

Estimated discount to fair value: 37.7%

Giant Biogene Holding is considered undervalued at HK$45.85, 37.7% below its estimated fair value of HK$73.6. The company’s revenue and earnings are expected to grow 24.8% and 22.06% annually, respectively, significantly outperforming the Hong Kong market average. Recent activity includes a follow-on offering of HK$1.64 billion and the announcement of a total dividend of HK$0.97 per share, boosting shareholder returns despite some concerns about recent significant insider selling.

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This Simply Wall St article is of a general nature. We comment based solely on historical data and analyst forecasts, using an unbiased methodology. Our articles are not intended as financial advice. They do not constitute a recommendation to buy or sell stocks and do not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.

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