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These 10 Stocks Are The Financially Weakest In Singapore’s Market Right Now

Ezra Holdings Limited (SGX: 5DN) and EMAS Offshore Ltd (SGX: UQ4) are two companies that are closely related in a number of ways.

Firstly, they are related – EMAS Offshore is a subsidiary of Ezra. Secondly, they are in very similar lines of businesses – both essentially provide support services to the oil and gas industry. Lastly, and most important for our purposes here, both are currently teetering on the edge of bankruptcy (the duo had recently made announcements that warned against going-concern issues).

It appears that their shaky, debt-laden balance sheets are on the verge of coming undone. Here’s a chart showing how the duo’s net-debt to shareholders’ equity ratios have changed over their past eight quarters:

Ezra and EMAS Offshore's net-debt to shareholders' equity ratios over past 8 quarters
Source: S&P Global Market Intelligence

As you can see, both Ezra and EMAS Offshore have had very high net-debt to shareholders’ equity ratios of around 100% or more over the past two years. They have been flirting with danger for a while now by borrowing heavily.

The experience of Ezra and EMAS Offshore is a good reminder for investors in Singapore that a company is at risk of running into serious financial trouble if its balance sheet is weak. This also got me thinking about which of the companies in Singapore’s stock market have the weakest balance sheets around.

To scratch my curiosity, I ran a screen using data from S&P Global Market Intelligence to find the 10 companies with the highest net-debt to shareholders’ equity ratio right now (I had excluded banks, business trusts, real estate investment trusts, and the duo of Ezra and EMAS Offshore). Here they are:

In the table below, you can see the net-debt to shareholders’ equity ratio of the 10 stocks:

Highest net debt to shareholders' equity ratio table
Source: S&P Global Market Intelligence

Being a part of the 10 stocks listed above need not necessarily be a bad thing. Companies that use debt wisely can help create enormous shareholder value over the long-term too. But, the 10 stocks I’ve named are still the financially weakest in Singapore’s market right now given the fact that they have the highest net-debt to shareholders’ equity ratios. Their current and prospective investors need to be aware of the risks involved.

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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 writer Chong Ser Jing does not own shares in any companies mentioned.