August 6

3 Little-Known Companies With Significant Share Buyback

There was a revival in stock prices since the global collapse in prices during March. However, the recovery in stock prices were not even. Some industries such as Technology recovered faster than other traditional sectors such as engineering.

As a result, some companies took the opportunity to employ share buybacks. Share buybacks are usually administered as the companies feel that the stock prices are undervalued. The management of the companies usually have a better understanding of the finances and future results. Buybacks could be regarded as a confidence booster to the company’s future results.

We have scouted the SGX market and have identified 3 companies for your considerations.

#1 Singapore Shipping Corporation Ltd

Singapore Shipping Corporation Limited (SSC) is well-established shipping group in Asia and listed on the main board of SGX. Its businesses include ship owning, ship management, shipping agency & Terminal Operations, and Logistics Services. SSC owns 6 vessels and charters it for the international market.

As of the latest annual report, SSC’s revenue decreased by 3.1% to USD 46.7 million. Its net profit decreased slightly by 10.9% to USD 9.2 million. Free cash flow came in at a healthy level of USD 11.4 million. As a result, cash balance of the company was at a high of USD 30.5 million. Results were slightly weaker due to the slightly weaker shipping market at the end of 2019.

SSC has been purchasing its shares back since 6th July 2020. In total it purchased 249,000 shares from the market. Total transactional value of all the shares amounted to $68,598 and share prices bought back were in the range of $0.25-0.26.

SSC last closed at $0.26, which values it at a P/E ratio of 8.46 and dividend yield of 3.85%.

#2 Straits Trading Company Ltd

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The Straits Trading Company Limited has international stakes in resources, real estate, hospitality and investments. Its real estate ecosystem comprises majority or strategic stakes in Straits Real Estate, ARA Asset Management Limited and Far East Hospitality Holdings.

It also has a diversified real estate portfolio that is wholly-owned by the Group. Straits Trading is also engaged in tin mining and smelting, and resource investments. It has majority stake in the world’s third-largest tin producer, Malaysia Smelting Corporation Berhad, which is dual listed on Bursa Malaysia and SGX-ST.

As of the latest annual report, Straits’s revenue decreased by 20.2% to $ 363.6 million. Its net profit, however, increased by an impressive 21.4% to $100.4 million. Free cash flow was at an enviable level of $80.4 million.

Cash balance reached an impressive and healthy level of $310.5 million. The decrease in revenue was made up by the lower cost of goods in the Tin production business. This has helped to boost the net profit of the company substantially.

Straits has been purchasing its shares back since 26th June 2020. In total it purchased 54,000 shares from the market. Total transactional value of all the shares amounted to $98,000 and share prices bought back were in the range of $1.61-1.64.

Straits Trading last closed at $1.59, which values it at a P/E ratio of 7.63 and dividend yield of 3.80%.

#3 Zhongmin Baihui Retail Group Ltd

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Zhongmin Baihui Retail Group Ltd (ZMBH) is principally engaged in the ownership, operation and management of department stores and supermarkets in Fujian Province. Outside of Fujian Province, the Group is involved in the outlet mall operation and management business in Changsha, Hunan Province

As of the latest quarterly report, ZMBH’s revenue increased by 8.7% to RMB 1.05 billion. Its net profit increased by 29% to RMB 52.2 million. Free cash flow came in at a good level of RMB 183 million. As a result, it has boosted the cash balance to RMB 260 million.

ZMBH has been purchasing its shares back since 7th July 2020. In total it purchased 28,000 shares from the market. Total transactional value of all the shares amounted to $17,000 and share prices bought back were in the range of $0.595 – 0.6.

ZMBH last closed at $0.595, which values it at a P/E ratio of 10.92 and dividend yield of 5.08%.

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Tags

little known stocks, SGX, share buyback, singapore shipping, singapore undervalued stocks, straits trading, undervalued stocks, zhongmin baihui


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