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3 Cheap Consumer Stocks to Buy Amid Hong Kong Volatility

The anti-extradition bill protests in Hong Kong have roiled the city and the stock market alike. Just last week, the Hang Seng Index fell to its lowest level since early January 2019 – with it already being hit by weak sentiment due to the US-China trade war.

However, amid all the fears, investors who have a long-term view of the Hong Kong stock market could prosper, especially by buying businesses that provide essential goods and services.

For example, consumer stocks might be better insulated from the after-shocks of the protests since citizens still need to buy daily necessities to carry on with their lives. With that, here are three consumer shares that investors can consider buying.

Company #1

The first company on my list is Lam Soon (Hong Kong) Limited (SEHK: 411), which produces consumer items such as flour, cooking oil, and home care cleaning products. One of the products it hawks is Knife oil. Knife, which was launched in 1963, continues to be a leading brand in the edible oil market. In Hong Kong, Knife peanut oil has a market share of around 48%. Other well-recognised products in its stable include Golden Statue, AXE, and Labour.

From 2014 to 2018, Lam Soon’s net profit grew 23.3% annually while its dividend climbed 17.5% per annum.

From its peak in April 2019, Lam Soon’s shares have fallen some 17%. At Lam Soon’s share price of HK$13.30 right now, it has a price-to-earnings (PE) ratio of around 10 and a dividend yield of 3.1%.

Company #2

Tianyun International Holdings Ltd (SEHK: 6836) is the next company on the list. Tianyun is involved in the production and sales of processed fruit products.

From 2015 to 2018, the company’s net profit has increased by 15% each year. With that, its dividend has grown by 13.6% annually (the company went public in July 2015).

Tianyun’s shares hit a 2019-peak of HK$1.40 each in March 2019. Since then, its shares have tumbled 15%. At Tianyun’s share price of HK$1.19 currently, it sports a PE ratio of around 7 and a dividend yield of 3.7%.

Company #3

Vitasoy International Holdings Ltd (SEHK: 345), the well-known producer of namesake Vitasoy soy milk, is the final company on my list.

Over the last five years from 2015 to 2019 (the company has a 31 March year-end), Vitasoy’s earnings grew by around 17% on an annualised basis while its dividend climbed 14.4% per annum.

Since hitting an all-time high in June 2019, Vitasoy’s shares have declined by 19%. Despite that, Vitasoy’s shares do not look cheap, unlike that of Lam Soon and Tianyun.

At Vitasoy’s share price of HK$37.45 right now, it has a PE ratio of 57 and a dividend yield of 1.1%. However, it could be worth paying up for Vitasoy’s shares as the company is growing rapidly in China.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Sudhan P doesn’t own shares in any companies mentioned.