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A stock that you can buy at a price below what it is worth is considered undervalued. This is the case for GuocoLand and Yangzijiang Shipbuilding (Holdings). There’s a few ways you can value a company. 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. Analysing the most recent financial data, I’ve created a list of companies that compare favourably in all criteria, making them potentially good investments.
GuocoLand Limited (SGX:F17)
GuocoLand Limited, an investment holding company, engages in the development, investment, and management of various properties. GuocoLand was formed in 1976 and with the company’s market capitalisation at SGD SGD2.29B, we can put it in the mid-cap category.
F17’s shares are now floating at around -74% beneath its intrinsic level of $7.91, at a price tag of S$2.06, according to my discounted cash flow model. This discrepancy signals a potential opportunity to buy F17 shares at a low price. In terms of relative valuation, F17’s PE ratio is trading at 4.74x against its its Real Estate peer level of, 9.71x suggesting that relative to its peers, we can purchase F17’s shares for cheaper. F17 is also robust in terms of financial health, as current assets can cover liabilities in the near term and over the long run. The stock’s debt-to-equity ratio of 126.53% has been diminishing over time, revealing F17’s ability to pay down its debt. Continue research on GuocoLand here.
Yangzijiang Shipbuilding (Holdings) Ltd. (SGX:BS6)
Yangzijiang Shipbuilding (Holdings) Ltd., an investment holding company, operates in the shipbuilding activities. Yangzijiang Shipbuilding (Holdings) was started in 1956 and with the stock’s market cap sitting at SGD SGD3.83B, it comes under the mid-cap stocks category.
BS6’s stock is currently trading at -45% lower than its real value of ¥1.77, at the market price of S$0.96, based on my discounted cash flow model. signalling an opportunity to buy the stock at a low price. Additionally, BS6’s PE ratio is trading at 6.32x compared to its Machinery peer level of, 12.01x suggesting that relative to its peers, we can buy BS6’s stock at a cheaper price today. BS6 also has a healthy balance sheet, with near-term assets able to cover upcoming and long-term liabilities. The stock’s debt-to-equity ratio of 14.30% has been declining for the past few years revealing its capacity to reduce its debt obligations year on year. More detail on Yangzijiang Shipbuilding (Holdings) here.