Performance in the real estate sector generally tracks the economic cycle. During periods of high growth and inflation, real estate investments usually post strong returns. However, during an economic bust, these investments tend to underperform. Currently, Debao Property Development and CWG International are real estate companies I’ve identified as potentially undervalued, meaning their share price is below what these companies are actually worth. There’s a few ways you can determine how much a cyclical company is actually worth. The most popular methods include discounting the company’s cash flows it is expected to create in the future, or comparing its price to its peers or the value of its assets. The discrepancy between the price and value means investors have an opportunity to buy shares at a discount. Below are the stocks I believe are undervalued on all criteria, based on their latest financial data.

Debao Property Development Ltd. (SGX:BTF)

Debao Property Development Ltd., an investment holding company, operates as an integrated property developer in the People’s Republic of China. Debao Property Development was established in 2000 and with the stock’s market cap sitting at SGD SGD12.07M, it comes under the small-cap stocks category.

BTF’s stock is now floating at around -99% beneath its actual level of ¥17.18, at a price tag of S$0.16, based on its expected future cash flows. This mismatch indicates a potential opportunity to buy low. Also, BTF’s PE ratio is trading at 1.72x against its its Real Estate peer level of, 10.21x indicating that relative to its peers, we can buy BTF’s stock at a cheaper price today. BTF is also strong financially, with current assets covering liabilities in the near term and over the long run.

More on Debao Property Development here.

CWG International Ltd. (SGX:ACW)

CWG International Ltd. engages in the development of real estate properties. Started in 2002, and headed by CEO Jianrong Qian, the company size now stands at 479 people and with the stock’s market cap sitting at SGD SGD128.44M, it comes under the small-cap group.

ACW’s shares are currently hovering at around -97% lower than its intrinsic level of ¥5.84, at a price tag of S$0.19, based on my discounted cash flow model. This mismatch indicates a chance to invest in ACW at a discounted price. What’s even more appeal is that ACW’s PE ratio is trading at 3.07x while its Real Estate peer level trades at, 10.21x implying that relative to its comparable company group, ACW’s stock can be bought at a cheaper price. ACW also has a healthy balance sheet, as current assets can cover liabilities in the near term and over the long run.

Dig deeper into CWG International here.

Hiap Hoe Limited (SGX:5JK)

Hiap Hoe Limited, an investment holding company, develops luxury and mid-tier residential, and hotel-cum-commercial properties in Australia and Singapore. Hiap Hoe was established in 1994 and has a market cap of SGD SGD418.80M, putting it in the small-cap stocks category.

5JK’s stock is now hovering at around -46% lower than its intrinsic level of $1.65, at a price tag of S$0.89, based on my discounted cash flow model. This mismatch signals an opportunity to buy 5JK shares at a discount. What’s even more appeal is that 5JK’s PE ratio stands at around 5.2x against its its Real Estate peer level of, 10.21x implying that relative to other stocks in the industry, we can purchase 5JK’s shares for cheaper. 5JK also has a healthy balance sheet, as current assets can cover liabilities in the near term and over the long run.

Interested in Hiap Hoe? Find out more here.

For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.