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Here Are Some Of The Singapore Market’s Cheapest Stocks Right Now

I have a habit of studying Singapore’s stock market at the start of every month to determine how cheap or expensive stocks are. One way I do so is to determine the number of net-net stocks that are available in the market.

A net-net stock is a stock with a market capitalisation that is lower than its net current asset value. The net current asset value is a simple financial number that can be calculated with the following formula:

Net current asset value = Total current assets minus total liabilities

In theory, a net-net stock is a fantastic bargain. That’s because investors can get a discount on the company’s current assets (assets such as cash and inventory) net of all its liabilities. Moreover, the company’s fixed assets (assets such as properties, factories, and equipment etc.) are thrown into the fray for free.

The logic follows that if a large number of net-net stocks can be found in Singapore’s market, then stocks would likely be really cheap at that point in time.

I had stressed the word “theory” earlier because net-net stocks are often companies that are in serious trouble and/or have horrible business economics. This means that investors in those companies are also at risk of seeing their capital evaporate if things continue heading south.

That’s one reason why diversification is important when investing in net-net stocks. The legendary Benjamin Graham, who liked to invest in net-net stocks when he was managing money professionally, tried to mitigate risks by diversifying widely amongst net-net stocks.

I thought it would be interesting and useful to share a list of some of the net-net stocks that popped up when I did my latest exercise of assessing the state of the market.

There were more than 90 of them, so I decided to create three lists instead: 1) The 10 net-net stocks that have the lowest market-cap-to-net-current-asset-value ratio: 2) the 10 net-net stocks with the largest market caps, and 3) the 10 largest net-net stocks that have positive net income over the last 12 months as well as more cash than debt on their balance sheets.

Here are the 10 stocks in the first list: Universal Resource and Services Ltd (SGX: BGO), Ace Achieve Infocom Limited (SGX: A75), China Haida Ltd (SGX: C92), China Taisan Tech Group Holdings Ltd (SGX: AZW), Full Apex (Holdings) Ltd (SGX: BTY), China Sports International Limited (SGX: FQ8), Nam Cheong Ltd (SGX: N4E), Noble Group Limited (SGX: CGP), Matex International Ltd (SGX: M15), Swing Media Technology Group Ltd (SGX: BEV).


Source: S&P Global Market Intelligence

Here are the 10 stocks in the second list: UOB-Kay Hian Holdings Limited (SGX: U10), Noble Group, Hong Leong Asia Ltd (SGX: H22), Kingboard Copper Foil Holdings Limited (SGX: K14), Hanwell Holdings Ltd (SGX: DM0), Cortina Holdings Limited (SGX: C41), Hengxin Technology Ltd (SGX: I85), Baker Technology Ltd (SGX: BTP), Nobel Design Holdings Ltd (SGX: 547), Top Global Limited (SGX: BHO).


Source: S&P Global Market Intelligence

And lastly, here are the stocks in the third list: Kingboard Copper Foil, Hanwell Holdings, Hengxin Technology, Nobel Design, ISDN Holdings Limited (SGX: I07), Multi-Chem Ltd (SGX: AWZ), Asia Enterprises Holdings Limited (SGX: A55), HG Metal Manufacturing Ltd (SGX: BTG), CDW Holding Limited (SGX: BXE), AP Oil International Ltd (SGX: 5AU).


Source: S&P Global Market Intelligence

I’m not recommending that investors buy or sell any of the stocks mentioned above. My purpose here is simply to share the names of some of Singapore’s cheapest stocks at the moment. Make of them what you will.

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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 owns shares in China Taisan Tech Group, China Sports International, Multi-Chem, and Asia Enterprises Holdings.