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), Hanwell Holdings Ltd (SGX: DM0), Sinostar PEC Holdings Limited (SGX: C9Q), YHI International Ltd (SGX: BPF), Goodland Group Ltd (SGX: 5PC), ISDN Holdings Ltd (SGX: I07), and Excelpoint Technology Ltd (SGX: BDF).Source: S&P Global Market Intelligence
The following are the stocks in the second list: Cortina Holdings Limited, Hanwell Holdings Ltd, Sinostar PEC Holdings Limited, ISDN Holdings Ltd, Dutech Holdings Ltd (SGX: CZ4), Ellipsiz Ltd (SGX:BIX), Multi-Chem Ltd (SGX: AWZ), Design Studio Group Ltd (SGX: D11), Asia Enterprises Holdings Limited (SGX: A55), and CDW Holding Limited (SGX: BXE).Source: S&P Global Market Intelligence
Let’s use Design Studio as an example to learn how to calculate a company’s net current asset value.
As a quick background, Design Studio is a high-end interior fit-out and joinery manufacturing firm. It was also featured as one of the 30 best stocks to own in Singapore for 2018.
As of 30 June 2018, Design Studio had total current assets of S$142.47 million and total liabilities of S$74.68 million. This gives a net current asset value of S$67.79 million. The firm’s stock price closed at S$0.26 on 15 August, translating to a market capitalisation of S$67.67 million. The ratio of its market-capitalisation-to-net-current-asset-value is, therefore, 0.998. This also means Design Studio is selling at a marginal 2% discount to its net current asset value.
The Foolish bottom line
Net-net stocks are usually companies that are in serious trouble or have poor business fundamentals. 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 the Singapore market currently 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 owns shares in Design Studio Group Ltd.