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3 CashFlow Generative Companies to Marvel at

by James Yeo // March 15, 2021

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The pandemic has made it woefully clear that cash is king. When shops are closed and citizens are under lock down, cash flows of many companies dried up. Without the government’s help, many more firms may have gone underwater. On the other hand, there are also stable/resilient companies with little debt and even churned out huge have taken very little or no debt and lived basically on its cash flow and existing cash. These companies are expected to last through the virus situation with little damage. We have scoured Singapore’s listed stocks and here are 3 amazing stocks that are net cash.

#1 Singapore Exchange Limited

Singapore Exchange Limited (SGX) is the only exchange in Singapore. It is headquarted in Singapore and provides a platform for equities, bonds, commodities, etc. About 40% of its listed companies and 80% of listed bonds are originated outside Singapore. As of its latest half-yearly report, SGX’s revenue increased by 8.8% to $520.8 million. Its net profit increased by 10.9% to $287.6 million. Free cash flow came in at $226.2 million. As a result, cash balance of the company increased to $721.4 million. SGX is currently sitting on a $721.4 million cash pile with borrowings of $488.5 million. The company is in a net cash position of $233 million. The operating expense of the company was at $199.3 million. This shows that even if SGX shuts down and stops functioning, it is still able to last a year. Theoretically this is not possible, thus it goes to show SGX is in a very favourable position. SGX last closed at $9.85, which values it at a P/E ratio of 21.25 and dividend yield of 3.20%.

#2 Sheng Siong Group Limited

Sheng Siong Group Ltd is one of Singapore’s largest retailers with 61 stores located all across the island. Our chain stores are designed to provide customers with both “wet and dry” shopping options ranging from a wide assortment of live, fresh and chilled produce, such as seafood, meat and vegetables to packaged, processed, frozen and/or preserved food products as well as general merchandise, including toiletries and essential household products. As of its latest quarterly report, Sheng Siong’s revenue increased by 44.6% to $1.07 billion. Its net profit increased by a remarkable 81.1% to $127.6 million. Free cash flow came in at $205.3 million. As a result, cash balance of the company almost tripled to $209.8 million. Sheng Siong currently has a $209.8 million of liquid cash with borrowings of $30 million. The company is in a net cash position of $179.8 million. It is an extremely admirable position as Sheng Siong barely has any loans. Its cash on hand is almost 7x of its borrowings, which makes the possibility of Sheng Siong going bankrupt to be almost none. Sheng Siong last closed at $1.61 which values it at a P/E of 21.46 and dividend yield of 3.29%.

#3 AEM Holdings Limited

AEM is a global leader offering application specific intelligent system test and handling solutions for semiconductor and electronics companies serving advanced computing, 5G and AI markets. Currently, AEM has 5 manufacturing plants located in Singapore, Malaysia, China, Finland and France. It has a global market presence spanning Asia, Europe, and the United States. As of its latest quarterly report, AEM’s revenue increased by a remarkable 85.7% to $435.5 million. Its net profit increased by 121% to $79.6 million. Cash balance of the company as a result increased to $129.8 million. AEM has cash and cash equivalents of $129.8 million with negligible debt. This is an amazing feat especially when it is a manufacturing-based company. It could be inferred that acquisitions or CAPEX of the company is acquired through cash flow of the company instead of taking on more debt. This goes to show the prudence of the management. It also proves that AEM is an extremely well-run cash flow positive company. AEM last closed at $4.40 which values it at a P/E of 14.06 and dividend yield of 1.84%.

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