I’m a value investor. So, I like to search for companies that are trading at good value. A list of stocks that are near their respective 52-week lows is a good place to start my search for a good reason. These are the stocks that are either neglected or beaten down by investors. And, some of these stocks can be bargains in relation to their actual economic worth because market participants can at times react too negatively to certain companies that have sound long-term prospects but have experienced some short-term stumbles. As such, I will screen for stocks that are…
I’m a value investor. So, I like to search for companies that are trading at good value. A list of stocks that are near their respective 52-week lows is a good place to start my search for a good reason.
These are the stocks that are either neglected or beaten down by investors. And, some of these stocks can be bargains in relation to their actual economic worth because market participants can at times react too negatively to certain companies that have sound long-term prospects but have experienced some short-term stumbles.
As such, I will screen for stocks that are trading near 52-week lows nearly once every week. There are many stocks that pop up on my screen each time I run it. In here, let’s look at three such stocks: Raffles Medical Group Ltd (SGX: BSL), Thai Beverage Public Company Limited (SGX: Y92) and Singapore Telecommunications Limited (SGX: Z74).
Source: SGX website
The first on the list is Raffles Medical. As a quick background, the firm runs hospital and healthcare services in Singapore. It also has a network of clinics in five countries and thirteen cities. Also, it has two hospitals under development in China.
For the first quarter ended 31 March 2018, Raffles Medical reported that revenue was up 4.6% year-on-year to S$120.2 million. Earnings per share (EPS) was up by 1.1% year-on-year to 0.89 cents. The higher revenue was driven by growth in revenue from the Hospital Services and Healthcare Services divisions. Raffles Medical’s borrowing stood at S$71.7 million while its cash and cash equivalents stood at S$94.0 million, as at 31 March 2018, giving it a net cash position of S$22.3 million.
In terms of outlook, Dr Loo Choon Yong, Executive Chairman of Raffles Medical, said:
“We will continue to grow in Singapore with the opening of Raffles Specialist Centre. In the region, we look forward to greater growth with the opening of Raffles Hospital Chongqing later this year.”
Thai Beverage is the next company on the list. As a quick introduction, Thai Beverage is a company operating in four different segments, namely, Spirits, Beer, Food, and Food Beverages.
In its latest earnings update, Thai Beverage announced that revenue was up 34.3% year-on-year to THB 67.6 billion. Similarly, EBITDA (earnings before interest, tax, depreciation and amortisation) grew by 28.2% as compared to last year to THB 11.9 billion. Yet, net profit attributable to shareholders declined 3.2% year-on-year to THB 6.3 billion. The decline was mainly due an increase in finance cost related to an acquisition and weaker performance from its existing beer business.
Thai Beverage’s stock price has down trended in the last 12 months, down about 15% during the period. At the current price of S$0.77, it is trading at a price-to-earnings ratio of 15.7 times.
The last company on the list today is Singapore Telecommunications, or Singtel.
In the company’s latest results for the fourth quarter ended 31 March 2018, revenue was flat at S$4.3 billion while net profit declined 19% due mainly to weaker results from Airtel and Telkomsel and adverse currency movements. Moreover, underlying net profit was also down by 8.4% year-on-year for the full year ended 31 March 2018, driven by lower share of profits from Airtel, lower economic interest in NetLink Trust and higher expenses.
The board recommended a final dividend of 10.7 cents per share, bringing the total dividend for FY2018 to 17.5 cents per share. In comparison, in FY2017, it paid out a total dividend of 17.5 cents per share.
In terms of outlook, Singtel’s revenue for FY2019 is expected to grow by low single digit, and EBITDA is expected to be stable. Also the company said that it expects to “maintain its ordinary dividends of 17.5 cents per share for the next two financial years and thereafter, will revert to the payout of between 60% and 75% of underlying net profit”.
A Foolish conclusion
It’s worth noting that not every company with a stock price near a 52-week low is a legitimate bargain. A declining stock price can decline yet further if the underlying business performance continues to weaken.
Nothing we’ve seen here about Raffles Medical, Thai Beverage and Singtel should be taken as the final word on their investing merits. The information presented in this piece should be viewed only as a useful starting point for further research.
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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 contributor Lawrence Nga doesn’t own shares in any companies mentioned. Motley Fool has a recommendation for Raffles Medical Group Ltd.