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Undervalued companies are those that trade at a price lower than their actual values, such as Cityneon Holdings and Olam International. There’s a few ways you can measure the value of a company – you can forecast how much money it will make in the future and base your valuation off of this, or you can look around at its peers of similar size and industry to roughly estimate what it should be worth. Below, I’ve created a list of companies that compare favourably in all criteria based on their most recent financial data, making them potentially good investments.
Cityneon Holdings Limited (SGX:5HJ)
Cityneon Holdings Limited provides interior architecture, experiential environment, event, and exhibition services to multinational corporations, governments, and private sector organizations worldwide. Cityneon Holdings was established in 1956 and with the stock’s market cap sitting at SGD SGD243.43M, it comes under the small-cap group.
5HJ’s stock is currently floating at around -55% under its intrinsic value of $2.19, at the market price of S$0.99, based on my discounted cash flow model. This discrepancy gives us a chance to invest in 5HJ at a discount. Furthermore, 5HJ’s PE ratio is around 12.71x relative to its index peer level of, 13.41x indicating that relative to its comparable set of companies, we can invest in 5HJ at a lower price. 5HJ is also in great financial shape, as near-term assets sufficiently cover liabilities in the near future as well as in the long run.
More on Cityneon Holdings here.
Olam International Limited (SGX:O32)
Olam International Limited engages in sourcing, processing, packaging, and merchandising of agricultural products worldwide. Founded in 1989, and headed by CEO Sunny Verghese, the company size now stands at 35,000 people and with the market cap of SGD SGD7.29B, it falls under the mid-cap category.
O32’s shares are currently hovering at around -65% under its value of $6.54, at a price of S$2.29, based on its expected future cash flows. The mismatch signals a potential chance to invest in O32 at a discounted price. What’s even more appeal is that O32’s PE ratio is trading at 13.28x relative to its Consumer Retailing peer level of, 20.27x suggesting that relative to its peers, O32’s shares can be purchased for a lower price. O32 is also robust in terms of financial health, with short-term assets covering liabilities in the near future as well as in the long run. Finally, its debt relative to equity is 175.02%, which has been falling for the past few years demonstrating its ability to reduce its debt obligations year on year. More detail on Olam International here.