The Singapore stock market has been anything but stable this year, and the instability might well continue into next year. As such, investors could be better off buying shares that have strong balance sheets. A healthy balance sheet allows the company to weather through any tough times smoothly.
With that, what are some of the stocks with strong balance sheets you can consider buying in 2019?
Sheng Siong Group Ltd (SGX: OV8) is the first company to be featured. It is a homegrown supermarket chain with 54 outlets in Singapore. Recently, the company expanded into China to capture growth in that market.
The supermarket chain’s revenue climbed consistently from S$687.4 million in 2013 to S$829.9 million in 2017, giving an annualised growth of 4.8%. Similarly, its net profit attributable to shareholders improved by an impressive 15.6% annually from S$38.9 million in 2013 to S$69.8 million in 2017. With the higher profitability, Sheng Siong’s net profit margin has grown from 5.7% to 8.4% over the same time frame.
As of 30 September 2018, the company had a rock-solid balance sheet with S$67.2 million in cash balance and no borrowings.
Sheng Siong’s share price closed at S$1.06 on 18 December 2018. At that price, the company had a trailing price-to-earnings (PE) ratio of 23 and a trailing dividend yield of 3.2%.
The next company on the list is Straco Corporation Ltd (SGX: S85). The company owns and operates tourism attractions in China and Singapore. In China, the company has the Shanghai Ocean Aquarium, Underwater World Xiamen, and Lintong Lixing Cable Car attractions under its umbrella. In our city-state, Straco has a majority stake in the iconic observation wheel, Singapore Flyer.
Over the past five years, Straco’s top-line grew by 15.2% annually, from S$72.8 million in 2013 to S$128.4 million in 2017. Its bottom-line also improved, but at a slower clip of 8.9%. Net profit in 2013 was S$34.1 million while that in 2017 came in at S$47.7 million.
Straco’s balance sheet had cash and cash equivalents of S$203.1 million with total debt of S$40.9 million, as of end-September 2018. The figures give a healthy net cash balance of more than S$160 million.
Shares in Straco last changed hands at S$0.68 each on 18 December 2018. The share price translates to a trailing PE ratio of 14 and a trailing dividend yield of 3.7%.
HRnetGroup Ltd (SGX: CHZ) is the final company to be featured. The firm, which went public in June 2017, is the biggest Asia-based recruitment agency in the Asia-Pacific region, excluding Japan.
From 2014 to 2017, HRnetGroup’s revenue grew from S$324.5 million to S$391.9 million, giving an annualised growth rate of 6.5%. Its net profit, in the meantime, rose 7.3% annually from S$33.4 million to S$41.3 million during the same time frame.
As of 30 September 2018, HRnetGroup had a robust balance sheet with S$275.4 million in cash and zero debt.
HRnetGroup’s share price closed at S$0.785 on 18 December 2018. At that price, the company had a trailing PE ratio of 14 and a trailing dividend yield of 2.9%.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Sheng Siong, Straco and HRnetGroup. Motley Fool Singapore contributor Sudhan P owns shares in Straco.