In this article, 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), SLB Development Ltd (SGX: 1J0), Hanwell Holdings Ltd (SGX: DM0), YHI International Ltd (SGX: BPF), 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, Nam Lee Pressed Metal Industries Ltd, ISDN Holdings Ltd, Multi-Chem Ltd (SGX: AWZ), Design Studio Group Ltd (SGX: D11), Asia Enterprises Holdings Limited (SGX: A55), Sunright Limited (SGX: S71), Sin Ghee Huat Corporation Ltd (SGX: B7K) and Datapulse Technology Limited (SGX: BKW).Source: S&P Global Market Intelligence
To learn how to calculate a company’s net current asset value, let’s use Sunright as an example. The company is one of the world’s largest independent providers of advanced semiconductor test and burn-in services.
As of 31 July 2018, Sunright had total current assets of S$133.26 million and total liabilities of S$60.89 million. This gives a net current asset value of S$72.37 million.
The firm’s share price closed at S$0.47 on 12 October 2018, giving a market capitalisation of S$57.72 million. The ratio of its market-capitalisation-to-net-current-asset-value was, therefore, 0.798. This also means that Sunright was selling at a 20% discount to its net current asset value.
The Foolish bottom line
Net-net stocks are usually companies that are in serious trouble and/or have poor business fundamentals. That is why 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 stock 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.