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. So what are the companies that have shown up on this week’s list? Here are three of them:
Source: SGX website (data as at 4 October 2018)
Oversea-Chinese Banking Corp Limited (SGX: O39), or OCBC, is one of the three main local banks listed in Singapore.
For the quarter ended 30 June 2018, OCBC reported that total income grew by 5% from a year ago to S$2.47 billion. Net interest income (income from loans) rose 8% year-on-year to S$1.45 billion, driven by improvement in net interest margin and loan volume growth. Similarly, non-interest income increased by 2% to S$1.02 billion as a result of growth across the board. Net profit jumped 16% to a record S$1.21 billion. For the quarter, OCBC declared an interim dividend per share of 20 cents, up two cents from a year ago.
Hongkong Land Holdings Limited (SGX: H78) is the next company that we will look at in this article. As a quick introduction, Hongkong Land is involved in property development, investment and management businesses in a number of cities in Asia.
In its latest first-half earnings update, Hongkong Land announced that underlying profit attributable to shareholders declined by 3% year-on-year to US$455 million. The lower underlying profit was due to timing of sales completion in China, partially offset by higher recurring rental income from its investment properties. As of 30 June 2018, it had net debt of US$3.1 billion, up from a net debt position of US$2.5 billion at the end of 2017.
Ben Keswick, chairman of Hongkong Land, commented the following on the company’s outlook:
“The strong performance from the Group’s investment properties is expected to continue in the second half of the year, while the contribution from development properties will benefit from higher sales completions in mainland China.”
Last but not least, we have SIA Engineering Company Ltd (SGX: S59) or SIAEC in short. As a quick introduction, SIAEC specialises in aircraft maintenance, repair, and overhaul (MRO) services to over 80 international airlines around the world.
In its latest earnings update, SIAEC reported that revenue was down 5.5% year-on-year to S$257.7 million. Operating profit plunged 45.5% year-on-year to S$10.2 million. Yet, share of profit from associates and joint ventures grew by 53.6% to S$32.4 million. The improvement in profits from associates and joint ventures was due to higher share of profits from engine and component centres. Net profit attributable to shareholders improved 10.4% year-on-year to S$40.5 million.
SIAEC provided the following outlook for the rest of the year:
“While the MRO environment remains challenging, the Group’s performance will continue to benefit from its portfolio of strategic partnerships.
The transformation journey we have embarked on to better serve our customers and improve our performance is progressing with phased implementation of various productivity and revenue generation initiatives. We will continue to invest in innovation and technology to enhance our capabilities.”
The Foolish conclusion
Though companies trading at 52-week low prices is a good place to search for investment ideas, the low price itself should not be the sole reason to invest in such companies. As we all know, there is no guarantee that the share prices will not fall further just because they are trading at 52-week lows.
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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 Singapore has recommendations for Hongkong Land Holdings Limited and Oversea-Chinese Banking Corp Limited.