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 on the first list: UOB-Kay Hian Holdings Limited (SGX: U10), Hong Leong Asia Ltd (SGX: H22), Kingboard Copper Foil Holdings Limited (SGX: K14), Sino Grandness Food Industry Group Ltd (SGX: T4B), Cortina Holdings Limited (SGX: C41), YHI International Ltd (SGX: BPF), Hanwell Holdings Ltd (SGX: DM0), Goodland Group Ltd (SGX: 5PC), IFS Capital Ltd (SGX: I49) and Serial System Ltd (SGX: S69).Source: S&P Global Market Intelligence
The following are the stocks on the second list: Kingboard Copper Foil Holdings Limited, Cortina Holdings Limited, Hanwell Holdings Ltd, ISDN Holdings Ltd (SGX: I07), Dutech Holdings Ltd (SGX: CZ4), Ellipsiz Ltd (SGX: BIX), Multi-Chem Ltd (SGX: AWZ), Sunright Limited (SGX: S71), 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 Dutech as an example. Headquartered in Shanghai, Dutech is a manufacturer of high-security products such as ATM safes, banking safes, commercial safes, and cash handling systems.
As of 30 September 2018, Dutech had total current assets of RMB 1.05 billion and total liabilities of RMB 625.25 million. This gives a net current asset value of RMB 426.30 million.
The firm’s share price closed at S$0.22 on 15 November 2018, giving a market capitalisation of S$78.44 million. After converting the net current asset value to Singapore dollars, the ratio of its market-capitalisation-to-net-current-asset-value was, therefore, around 0.93. This also means that Dutech was selling at a 7% discount to its net current asset value.
The Foolish bottom line
Net-net stocks are generally 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 Singapore’s 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 doesn’t own shares in any companies mentioned.