3 Hong Kong Stocks Near Their 52-Week Lows: Are They a Bargain?
With the latest release of the US Consumer Price Index (CPI) data on the 11 July 2024 showing cooling inflation, the allure of non-US-denominated instruments has increased.
In addition, China’s exports experienced an 8.6% year on year growth for the month of June, beating market expectations of an 8.0% year on year increase.
These sets of positive news propelled the Hang Seng Index (^HSI) to rally on 12 July, sending the index up by 2.5%.
Given the current optimism, this might be a perfect opportunity to acquire some Hong Kong stocks trading at a discount, potentially capitalising on a market rebound.
Here are three Hong Kong stocks near their 52-week lows that you can consider for your investment portfolio.
Nongfu Spring (SEHK: 9633)
Nongfu Spring, one of China’s leading blue-chip stocks, has experienced a tough first half of 2024 (1H 2024).
The company, renowned for its packaged mineral water, saw its share plummet by over 33% year to date (YTD).
Shares are currently trading at HK$29.45 and are touching a new 52-week low.
Nongfu Spring holds the largest market share in the packaging water business.
Apart from packaged mineral water, the company offers a wide range of beverages including tea, isotonic drinks, and fruit juices.
For 2023, Nongfu Spring reported revenue of RMB 42.7 billion, a 28.4% year on year growth.
Net profit came in at RMB 12.1 billion, marking a significant 42.2% year on year growth.
The beverage distributor also generated a positive free cash flow of RMB 12.3 billion.
While packaged mineral water contributed most to the company’s revenue at 47.5%, its tea business has witnessed astounding growth in 2023.
Sales of tea products surged by 83.3% year on year, contributing 29.7% to total revenue for 2023.
Given the necessity of water and the affordability of packaged beverages, Nongfu Spring’s business should remain resilient during this period of uncertainty in China’s economic climate.
This resilience can be demonstrated by the company’s consistent yearly profit growth since fiscal year 2019.
The group will distribute an annual dividend of HK$0.82 a share for 2023 on 28 August 2024.
With an annual dividend payout and a stable business model, Nongfu Spring stands as a solid defensive stock for your picking.
Li-Ning Company (SEHK: 2331)
Li-Ning is a leading Chinese athletic apparel company.
The sports brand was founded by the athletic Li Ning, regarded as China’s Prince of Gymnastics.
The company offers a selection of products for different sports: Basketball, Badminton, Running and Training.
Currently, Li-Ning’s share price is trading at HK$14.06, having just rebounded from a 52-week low of HK$13.96.
Li-Ning saw a mixed financial performance for 2023.
While revenue increased by 7.0% year on year to RMB 27.6 billion, net profit declined by 21.6% year on year to RMB 3.2 billion.
The reduction in net profit was attributable to several reasons, including increased advertising and sponsorship expenses, as well as higher operating costs.
Operating profit for 2023 stood at RMB 3.6 billion, down 27.2% year on year.
Despite these challenges, Li-Ning generated a positive free cash flow of RMB 2.9 billion.
The company is sponsoring some of China’s most famous athletes for the Paris Olympics.
One of them will be Ma Long, a legendary table tennis star, which could enhance Li-Ning’s brand appeal.
Additionally, a recent report by the Wall Street Journal highlighted a trend among Chinese consumers favouring domestic brands due to rising nationalistic sentiments.
As one of China’s leading sports brands, Li-Ning will likely benefit from this movement.
For 2023, Li Ning distributed a total dividend of RMB 0.5474 a share.
While it is not near its 52-week low, another leading sports brand investors can consider is Anta Sports (SEHK: 2020)
Anta Sports is the official sportswear partner for China’s Olympic team this year.
Samsonite International (SEHK: 1910)
Samsonite is a brand that many readers might be familiar with, primarily recognised for its travel luggage.
Samsonite is owned by its parent company, Samsonite International.
With over 110 years of history, Samsonite International has transitioned from manufacturing wooden trunks to becoming a global lifestyle bag company.
Besides its flagship Samsonite brand, the company’s portfolio includes other notable brands such as American Tourister, Lipault Paris, and Tumi.
As of now, Samsonite International is trading at HK$20.95, just above its 52-week low of HK$19.70.
For the first quarter of 2024 (1Q 2024), the company delivered a strong set of earnings.
The company achieved a 1Q record revenue of US$859.6 million, a 4.1% year on year growth.
This upbeat performance was driven by increased revenues across all three core brands: Samsonite, Tumi, and American Tourister.
Net profit jumped by 12.3% year on year to US$82.9 million.
Strong profit growth was driven by improved gross margins, which increased by 2.4 percentage points year on year to a 1Q record of 60.4%.
Free cash flow came in at US$6 million, reversing the previous year’s negative free cash flow of US$62 million.
Samsonite International provided a positive outlook for the remainder of 2024, citing strong global passenger traffic, which is expected to surpass pre-pandemic levels for the first time.
Lastly, Samsonite has announced a dividend payout for 2023 at HK$0.7982 a share.
With a strong earnings profile and a promising outlook, Samsonite International presents itself as an attractive bargain.
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Disclosure: Aw Kai Rui does not own any of the stocks mentioned in this article.
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