In a previous article here, we saw that there were 105 net-net stocks, as of 13 September 2018. To know what a net-net stock is, you can jump in here. Now, let’s look at 20 of those cheapest 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),…
Now, let’s look at 20 of those cheapest 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), YHI International Ltd (SGX: BPF), Sinostar PEC Holdings Limited (SGX: C9Q), Nam Lee Pressed Metal Industries Ltd (SGX: G0I), Goodland Group Ltd (SGX: 5PC) and ISDN Holdings Ltd (SGX: I07).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, Nam Lee Pressed Metal Industries Ltd, ISDN Holdings Ltd, Multi-Chem Ltd, PNE Industries Ltd (SGX: BDA), Design Studio Group Ltd (SGX: D11), Datapulse Technology Limited (SGX: BKW) and Asia Enterprises Holdings Limited (SGX: A55).Source: S&P Global Market Intelligence
To learn how to calculate a company’s net current asset value, let’s use Datapulse Technology as an example. The company used to be a provider of digital storage products and services in the Asia Pacific region. However, it recently exited that business and diversified into the haircare, cosmetics and other household chemical products industry instead.
As of 30 April 2018, Datapulse Technology had total current assets of S$85.38 million and total liabilities of S$3.83 million. This gives a net current asset value of S$81.55 million. The firm’s stock price closed at S$0.285 on 12 September 2018 (the shares were not traded on 13 September), translating to a market capitalisation of S$62.44 million. The ratio of its market-capitalisation-to-net-current-asset-value was, therefore, 0.766. This also means Datapulse Technology was selling at a 23% discount to its net current asset value.
The Foolish bottom line
Net-net stocks are mostly companies that are in serious trouble or have poor business fundamentals. Therefore, diversification is important when investing in such stocks.
The two lists of cheap stocks seen earlier are not a recommendation to buy or sell any of those stocks. The aim here is to simply share some of the undervalued stocks in the Singapore market right now 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.