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Could LionGold Corp Be A Value Buying Opportunity?

The technology sector has been making headlines recently thanks to news of Alibaba’s flotation and the unveiling of the Apple’s new product line.

But what about the technology companies listed here in Singapore. How do they stack up ? After all, Singapore has 60 companies categorised under the technology sector. Seven of these companies make up the FTSE ST Technology Index.

Five of these companies are pure technology companies. They are, in no particular order, Silverlake Axis (SGX: 5CP), STATS ChipPAC (SGX: S24), CSE Global (SGX: 544), Nera Telecommunications (SGX: N01) and DMX Technologies Group (SGX: 5CH).

The other two companies, OKH Global (SGX: S3N) and LionGold Corp (SGX: A78), are reckoned to have significant non-technology business.

Capitalised at around S$3 billion, Silverlake is the largest by far. It accounts for over half of the total combined market capitalisation of the seven companies.

However, its price-to-book ratio of over 12 and an earnings multiple of 45 means that Silverlake is not cheap. It is unlikely that a value investor would want to pay such a high premium.

Among the smaller companies in the index, with a capitalisation of under S$300m, is Nera Telecommunications. The company provides satellite communications, microwave solutions and wireless broadband access to clients in South East Asia.

With an earnings multiple just shy of 19, Nera is pricier than the market average. However, some may find the dividend yield of 7.6% appealing.

The smallest of the seven components is LionGold Corp with a market value of around S$50 million. As one of the two companies in the index with significant non-technology business, LionGold has sought to establish itself in the gold mining industry, where it has acquired interests in eight gold exploration and mining companies since 2012.

LionGold currently trades near its 52-week low, which is a level that it has wallowed around since a dramatic fall last October. The company doesn’t have a Price-to-Earnings ratio, since it hasn’t made a profit. But it does have cash on its balance sheet and trades at half its book value.

So the question is this: Has LionGold’s fall been overdone or could it be a buying opportunity?

A pure value investor would probably like to paid whilst waiting for value to be outed. LionGold, unfortunately, doesn’t pay a dividend.

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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 Singapore Director David Kuo doesn’t own shares in any companies mentioned.