Tuesday, July 1, 2014

Expanding the Watchlist

Since back in May, I have been creating an SGX watchlist of stocks to monitor. Most of them passed my simple screen of just being understandable companies that don't seem overvalued.

However, today I decided to revisit this space and set up a new screen using the FT stock screener:

As you can see, I am looking for companies that are not overpriced, low debt and are profitable. Let's see what are the few that I got that looks interesting:

Baker Tech is a local, cash-rich company with close to no debt. Oil and gas offshore engineering stuff. I like how they are branching out and created an investment arm last year to search for more opportunities for themselves. But seriously, the amount of cash in this company is ridiculous. Very interesting company with a very clean balance sheet. I like.

Chuan Hup looks great to me. A stock of stocks. They own 24% of CH Offshore, a company very similar to the primary business of Baker Tech also listed on SGX. They have another similar Malaysian business listed on the Malaysian exchange. They have a 77% stake in PCI, an electronics manufacturer on the SGX. It has some marginal debt, but it's profit margins doesn't look. They own 17% in Finbar, a property arm listed in Australia. They are sitting on a bucket load of cash as well and have more than enough to service dividends at the current level. Undervalued based on NAV. This looks like what Baker Tech could be in 10 years time if it really manages to branch out.

Hotung Investment Holdings, I just love the website! With websites as shitty as that, the business has got to be a good one, as long as they aren't involved in IT services! It's a Taiwanese venture capital investment firm with a strong exposure in the Greater China market, which is not easily accessible. Why buy Chinese stocks when you can buy the company that lists them and sell them away? They have an amazing balance sheet. Their cash equivalents is about 7 times their total liabilities. It's fantastic! Loves it.

AP Oil doesn't have good gross margins or profit margins, but they have a pretty good balance sheet and again sitting on an impressive stack of cash. An oil product business, doesn't seem very exciting, but they look stable. Should have no problems delivering on the dividends, but it's on the low side at about 2.5%

NSL looks nice as an minor environmental play going into the future. However, because of it's massive special dividend, it's share price has spiked up this year. I don't really like it that 82% of it is held by an investment holdings company, I wouldn't want my investment to be de-listed. Quite a sturdy balance sheet, but I wouldn't invest now after the massive price spike.

Finally, the last counter that looks good in Spindex, which I have actually talked about back in May when it was just around $0.48. It has since gone up 10%, but I suppose the fundamentals that I talked about are still intact, except it is more richly valued now. Companies with good cash reserves, low debt with a decent profitable business does seem like a good recipe eh?

I'm added all these counters to my watchlist, with Hotung and Chuan Hup placed very highly over the other counters that I've been watching carefully. Hotung @ $0.142 and Chuan Hup @ $0.26 would make me sit up and strongly consider a position. We shall see!

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