By Say Cheong //
November 18, 2021

Many factors will affect a company’s share price, be it political risk, weak outlook, etc. These sentiments may be temporary but it still hit the stocks severely as one negative sentiment leads to another.

As a result, these stocks will be sold down to its 52 weeks low and beyond like the China stocks… *ahem* Alibaba *ahem*…

On the other hand, many of these 52W low stocks are also net cash firms – with more cash than debt. This sets them up for a spring coil with the gun powder below and ready to strike when the opportunity comes (catalyst).

Below, we highlight 3 stocks trading at its 52 weeks low and is in a net cash position too.

Net Cash Stock#1 – Riverstone Holdings

Malaysia-based Riverstone is a global market leader in the manufacturing of nitrile and natural rubber clean room gloves used in highly controlled and critical environments as well as premium nitrile gloves used in the healthcare industry.

The company’s proprietary “RS Riverstone Resources” brand is the preferred cleanroom glove for use in high-tech manufacturing industries. The company also manufactures cleanroom consumables such as finger cots and facemasks. Its customers are global leaders in the HDD, LCD, semiconductor, consumer electronics, pharmaceutical and healthcare industries. The company employs more than 4,000 people throughout its six manufacturing facilities in Malaysia (4), Thailand (1) and China (1) with an annual production capacity of 10.5 billion gloves as at 31 December 2020.

It also has an established global network of sales offices to serve its customers in Singapore, Malaysia, Thailand, the Philippines, China and the U.S..

As of its latest 3rd quarter report, Riverstone reported 3Q21 net profit of RM266.4m (+49% y-o-y, -49% q-o-q) on 35% y-o-y increase (-34% q-o-q) in revenue. 3Q21 gross margin came in at 54.7%, vs 69.6% in 2Q21.

It possesses a net cash financial position of RM433.9 mil trailing 12m ended Jun 2021. As COVID is still prevalent and harming our daily lives, gloves will remain in huge demand and this additional cash could help UG to expand its capabilities to capture the market share.

Riverstone last closed at $0.79, which valued the company at a P/E ratio of 5.5x and a 8.3% dividend yield.

Net Cash Stock#2 – Sheng Siong Group Ltd

Sheng Siong Group Ltd is one of Singapore’s largest retailers with 63 stores located all across the island.

Its 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, fruits and vegetables to packaged, processed, frozen and/or preserved food products as well as general merchandise, including toiletries and essential household products.

Over the past decade, it has begun developing a selection of house brands to offer our customers quality alternatives to national brands at substantial savings. To date, it has over 1,400 products under 23 house brands.

As of its latest 3rd Qtr results, Sheng Siong’s net profit for the third quarter to September rose 8.3% year on year to S$34.4 million on higher revenue and improved sales mix that included products with higher margins.

Gross profit margin also increased to a record high at 29% (+0.1 ppt QoQ), mainly attributable to higher sales mix of fresh products and house brands. Coupled with the 3rd overseas  store opening, analysts are increasing their target prices like OCBC here and Philip Capital here.

Sheng Siong is in a net cash position of $177 million which is substantial in terms of its borrowings. It carries total financial borrowings of $70 million, which meant that it has a comfortable quick ratio of 2.52X.

The cash rich position will allow Sheng Siong to expand its operations not only in Singapore but also in China, which they have started to have a few stalls. This will definitely bode well for its future.

Sheng Siong last closed at $1.51. This values the company at a P/E of 16.2X and a dividend yield of 4.3%.

Net Cash Stock#3 – GS Holdings

GS Holdings Limited has a diversified business model with an aim to create continuous streams of income.

Since 2019, the Group ventured into the following 2 new businesses with the aim of diversifying our business model and creating additional streams of income: 1) F&B business, 2) Branding, Operation and Procurement Services.

As of its half- yearly report, GS’s revenue increased slightly by 1% to $ 6.25 million. Its net profit decreased by 30% to$ 1.01 million. This is mostly at the back of higher administrative expenses.

Free cash flow came in slightly negative. Cash balance of the company excluding its cash from encumbrance is at a healthy level of $5.6 million

GS is in a net cash position of $ 1.6 million excluding its encumbrance of approximately $20 million. It carries total financial borrowings of $4.1 million. Taking into account the encumbrance of $20 million, the company will be in a net cash position of $21.6 million.

With F&B industry taking a hit right now across Singapore, it might be a good opportunity for the company to swoop up businesses that are suffering at a good valuation. This would bode well for investors.

GS last traded at $0.37, which valued the company at a P/B ratio of 2.4x and around 2.5% dividend yield.

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