By Say Cheong //
October 30, 2020

COVID-19 has stunted growth of many companies and also put many companies out of business.

Examples include the famous JCPenney and most recently, Robinsons closing down in Singapore. Other than facing a poor macro-economic outlook, most of the companies went bankrupt due to a heavy debt burden.

In these tough times, one cannot stress the importance of the slogan – ‘Cash is King’.

Companies with ample cash on hand could leverage on the current situation to acquire companies at good prices and continue to expand while its competitors are reeling from the pain.

With that, we have scoured out 3 companies with either a big warchest or positive cash flow generation.

#1 Sheng Siong Limited  

Sheng Siong stock

Sheng Siong Group Ltd. is one of the largest supermarket chains in Singapore with 64 outlets all across the island. The Group’s outlets are primarily located in retail locations in the heartlands of Singapore.

The outlets are designed to provide its customers with both “wet and dry” shopping options including:

  • Wide assortment of live, fresh and chilled produce, such as seafood, meat and vegetables,
  • Processed, packaged
  • Preserved food products
  • General merchandise such as toiletries and essential household products.

Sheng Siong has developed a selection of housebrands to offer customers quality alternatives to national brands at substantial savings. Sheng Siong offers over 1200 products under its 18 housebrands, ranging from food products to paper goods.

As of its latest business update for 3Q2020, Sheng Siong’s revenue increased by an impressive 28.9% yoy to % to $327.3 million. Its net profit increased by even more at 54.4% yoy to S$31.8 million.

It possesses a robust balance sheet with $209 mil in cash and cash equivalents and only $30 mil in debt. And this is even after it doubled its half-yearly dividends per share in Jun 2020.

Sheng Siong last closed at $1.66, which values it at a P/E ratio of 32.7x. The dividend yield stands at a decent 2.15%.

#2 Fu Yu Corporation Limited

Fu Yu is now one of the largest manufacturers and suppliers of high-precision injection moulds and plastic parts in Asia.

Currently, Fu Yu have 8 manufacturing plants in Singapore, Malaysia and China. The market it serves include the IT sector, telecommunications, automotive, medical, etc.

As of its latest half-yearly report, Fu Yu’s revenue decreased by 26% to $71.6 million. Its net profit impressively increase by 46.3% to $7.38 million. Free cash flow came in at $16.9 million. As a result, cash balance of the company maintains at a sustainable level of  $101.6 million.

Fu Yu is in a net cash position of $101.6 million and do not have any bank debts or bonds. Lease liabilities are the only form of interest payments that it has on its balance sheet. The company’s selling and administrative expenses are at $13 million.

This means that the company has enough cash to pay its workers and other expenses even if they do not sell any products for a whopping 7.5 years!

Fu Yu last closed at $0.23 which values it at a P/E of 13.6x and dividend yield of 6.9%.

#3 Pan Hong Holdings Limited

Pan Hong is a niche property development firm headquartered in Hong Kong. The group started out in Zhejiang province and was one of the few foreign property developers in the region. Pan Hong has also started its involvement in biological technology.

As of its latest annual report, Pan Hong’s revenue increased by a superb 120.1% to RMB 643.9 million. Its net profit increased correspondingly by 107.4% to RMB 113.6 million. Free cash flow came in at a RMB 36.04 million and its cash balance increased slightly to RMB $281.2 million.

Pan Hong is in a net cash position of RMB 261.4 million. This puts it in a really strong position to win projects as its expenses only amount to RMB 38.4 million. That would mean the company can continue to run for a few years even if it does not have many projects.

Pan Hong last closed at $0.11 which values it at a P/B of 0.39x and dividend yield of 3.59%.

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