Let’s look at 20 of the net-net stocks sorted out according to the following two lists:
1) The 10 net-net stocks with the largest market capitalisations; and
2) 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: UOB-Kay Hian Holdings Limited (SGX: U10), Hong Leong Asia Ltd (SGX: H22), Sino Grandness Food Industry Group Ltd (SGX: T4B), Cortina Holdings Limited (SGX: C41), Fu Yu Corporation Ltd (SGX: F13), YHI International Ltd (SGX: BPF), Hanwell Holdings Ltd (SGX: DM0), Sinostar PEC Holdings Limited (SGX: C9Q), Goodland Group Ltd (SGX: 5PC) and Nam Lee Pressed Metal Industries Ltd (SGX: G0I).Source: S&P Global Market Intelligence
The following are the stocks in the second list: Fu Yu Corporation Ltd, Hanwell Holdings Ltd, Sinostar PEC Holdings Limited, Nam Lee Pressed Metal Industries Ltd, ISDN Holdings Ltd (SGX: I07), Multi-Chem Ltd (SGX: AWZ), Ellipsiz Ltd (SGX:BIX), Allied Technologies Ltd (SGX: A13), Datapulse Technology Limited (SGX: BKW) and Asia Enterprises Holdings Limited (SGX: A55).Source: S&P Global Market Intelligence
Let’s use Fu Yu as an example to learn how to calculate a company’s net current asset value. As a quick background, Fu Yu is one of the largest manufacturers of high precision plastic parts and moulds in Asia.
As of 31 March 2018, Fu Yu had total current assets of S$178.98 million and total liabilities of S$47.84 million. This gives a net current asset value of S$131.14 million. The firm’s stock price closed at S$0.17 on 16 July, translating to a market capitalisation of S$128 million. The ratio of its market-capitalisation-to-net-current-asset-value is, therefore, 0.98. This also means Fu Yu is selling at a marginal 2% discount to its net current asset value.
The Foolish bottomline
Net-net stocks are usually companies in dire straits. That is why diversification is important when investing in them.
The two lists of cheap stocks seen earlier are not a recommendation to buy or sell any of the stocks. The aim here is to simply share some of the undervalued stocks in Singapore for your own 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 Sudhan P doesn’t own shares in any companies mentioned.