A stock that you can buy at a price below what it is worth is considered undervalued. This is the case for GuocoLand and Tiong Seng Holdings. 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.
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 stock’s market cap sitting at SGD SGD2.55B, it comes under the mid-cap group.
F17’s shares are currently trading at -67% beneath its value of $6.98, at the market price of $2.3, according to my discounted cash flow model. signalling an opportunity to buy the stock at a low price. Also, F17’s PE ratio is trading at around 5.1x while its real estate peer level trades at 11.6x, suggesting that relative to its competitors, F17’s shares can be purchased for a lower price. F17 is also strong in terms of its financial health, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. It’s debt-to-equity ratio of 109% has been dropping for the last couple of years signalling its capability to reduce its debt obligations year on year. More detail on GuocoLand here.
Tiong Seng Holdings Limited (SGX:BFI)
Tiong Seng Holdings Limited, together with its subsidiaries, operates as a building construction and civil engineering contractor. The company was established in 1959 and with the stock’s market cap sitting at SGD SGD172.59M, it comes under the small-cap group.
BFI’s stock is now floating at around -80% under its real value of $1.93, at a price of $0.39, based on my discounted cash flow model. This discrepancy signals a potential opportunity to buy BFI shares at a low price. What’s even more appeal is that BFI’s PE ratio stands at 7x compared to its construction peer level of 10.5x, indicating that relative to its comparable company group, we can purchase BFI’s shares for cheaper. BFI is also a financially healthy company, with short-term assets covering liabilities in the near future as well as in the long run. Finally, its debt relative to equity is 33%, which has been dropping for the last couple of years indicating BFI’s ability to pay down its debt. More detail on Tiong Seng Holdings here.