The real estate sector performs relatively in-line with the wider economy. Prosperous periods bring about high growth and inflation, leading to strong returns in real estate investments. Goodland Group and SingHaiyi Group are real estate companies that are currently trading below what they’re actually worth. There’s a few ways you can value a cyclical 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.

Goodland Group Limited (SGX:5PC)

Goodland Group Limited, an investment holding company, engages in real estate development activities in Singapore and Malaysia. The company was established in 1993 and with the stock’s market cap sitting at SGD SGD91.98M, it comes under the small-cap stocks category.

5PC’s stock is now hovering at around -88% under its true level of $2.13, at a price tag of S$0.26, according to my discounted cash flow model. This mismatch indicates a potential opportunity to buy low. Furthermore, 5PC’s PE ratio is currently around 5.16x against its its Real Estate peer level of, 10.52x suggesting that relative to other stocks in the industry, 5PC’s stock can be bought at a cheaper price. 5PC is also a financially healthy company, with near-term assets able to cover upcoming and long-term liabilities. It’s debt-to-equity ratio of 35.85% has been diminishing over time, demonstrating its ability to pay down its debt. More detail on Goodland Group here.

SingHaiyi Group Ltd. (SGX:5H0)

SingHaiyi Group Ltd., an investment holding company, develops, owns, and manages real estate properties in Singapore, Malaysia, and the United States. The company was established in 1988 and with the company’s market cap sitting at SGD SGD287.03M, it falls under the small-cap group.

5H0’s shares are currently hovering at around -94% beneath its actual worth of $1.75, at a price tag of S$0.10, based on its expected future cash flows. This discrepancy signals a potential opportunity to buy 5H0 shares at a low price. Also, 5H0’s PE ratio is currently around 5.99x relative to its Real Estate peer level of, 10.52x implying that relative to its comparable set of companies, we can invest in 5H0 at a lower price. 5H0 is also in good financial health, as current assets can cover liabilities in the near term and over the long run. Finally, its debt relative to equity is 28.84%, which has been dropping for the last couple of years signalling its capacity to pay down its debt. More detail on SingHaiyi Group here.