5 Undervalued Stocks with High Dividend Yields

November 2022

Global markets down but the Singaporean market still up? Are there some undervalued stocks that have high dividend yields?


Global stock markets have been on a downtrend as the conflict in Russia-Ukraine continues and the Fed continues with its rate hikes.

Although the Dow Jones and Hang Seng China Enterprise Index declined by double digits, the Strait Times Index (Singapore) market stayed resilient during the same period.

Investors are now increasingly looking at undervalued stocks with decent dividend yields so here are 5 of them below…

#1 Global Testing Corporation

Global Testing (SGX: AYN) provides testing services to the semiconductors industry. In technical terms, it focuses on testing services for logic and mixed semiconductors used in consumer electronics and communication devices.

Semiconductor companies always need to test whether their products are working before they are assembled into the final products. Hence, companies like Global Testing provides an essential testing ground for them to do so.

Its business is mainly concentrated in Taiwan, and its clients include the renowned companies like

  • Taiwan Semiconductor Manufacturing Manufacturing Company (TSMC)
  • United Microelectronics Company (UMC)
  • Realtek Semiconductor Corp (RSC)

Global Testing Corp’s financial performance has been very impressive during the pandemic. Revenue doubled from SG$231 million in 2019 to SG$501 million in 2021.

It is a highly scalable business as the doubling of revenue reversed its loss of SG$8.6 million in 2019 to a profit of SG$66 million in 2021.

It also boasts one of the highest dividend yield of more than 15% at the time of writing, and has been paying dividends after the pandemic.

global testing dividend

On this note, investors should take note of the fluctuating dividends payouts based on history dating back to FY2017.

Global Testing Corp is currently trading at a P/E ratio of 2.4x; much lower when compared to its industry average of 16 times and AEM of 7.3x P/E.

#2 Prime US REIT

Prime US REIT is a real estate investment trust company focused on investing in prime office assets in the U.S.

It currently has 14 Class A freehold office properties in 10 U.S. states of California, Utah, Colorado, Texas, Missouri, Georgia, Florida, Virginia, Maryland, and Pennsylvania.

Post-covid rebound led to a 2.5x jump in revenue from US$60.7 million in 2019 to US158.7 million in 2021 during the pandemic.

Operating cash flow (which is a measure of how much cash is being generated from its operations) more than doubled to US$95.7 billion in 2021 from US$44.4 billion in 2019.

Prime US REIT currently has a P/B ratio of 0.6x and offers a juicy dividend yield of 13%, much higher than its peer average of 6.0%.

#3 Hotung Investment Holdings

Hotung Investment Holdings (“Hotung” in short) invests mainly in venture capital businesses in Taiwan, China and the U.S. HIH helps them to grow and expand their businesses.

It mainly invests in the sectors of Ecommerce, manufacturing, healthcare, biotech, agriculture, artificial intelligence, internet-of-things, and cloud services with 700 companies estimated to be worth US$5 billion.

Hotung is having the best financial performance in the previous two years. Revenue doubled from SG$22.4 million in 2019 to SG$50.0 million in 2021, while profits are at its historical high of SG$30.5 million.

In terms of valuation, Hotung’s price-to-book ratio is at 0.6 times, much lower when compared to its peers average of 1.3 times. Likewise, dividend yield stands at 13.4%, much higher when compared to the industry average of 3.7%.

#4 Jiutian Chemical Group

Jiutian Chemical Group is a manufacturer of intermediate chemical compounds for the production of other goods. These compounds include dimethylformamide, methylamine, sodium hydro sulfite, consumable carbon dioxide, and oxygen-18.

Jiutian Chemical Group’s operations are mainly in China, with its main factory in Henan, and customers in Hebei, Shanxi, Hubei, Shandong, Jiangsu and Anhui.

Similar to other companies on this list, Jiutian Chemical had one of the best financial performance during the pandemic. Revenue grew by more than 2 times from SG$203.6 million in 2019 to SG$461.0 million in 2021.

Furthermore, the returns on asset of JCG is now at its highest of 17.2% in 2021, compared to its historical average range of around 0.5% to 4.7% from 2013 to 2020.

Jiutian Chemical is now trading at a price-to-book ratio of 0.7 times, and is much lower than the historical average (2018 to 2021) of 1.7 times.

Its current dividend yield is also pretty high at 10.5% compared to the industry average of 2.1%.

#5 Sin Heng Heavy Machinery

Sin Heng Heavy Machinery is a provider of heavy lifting services which include cranes, aerial lifts and other heavy lifting equipment to infrastructure, construction, civil engineering, offshore and marine companies.

Sin Heng has dealership rights to Kobelco and Kato brands, and is in other countries like Malaysia, Indonesia and Myanmar.

Sin Heng has managed to reversed its loss of S$$1.3 million in 2019 to a profit of S$3.8 million in 2021. This is still room for growth as FY2015 is the peak of its financial performance with a net profit of S$12.0 million.

Trading at a price-to-book valuation of 0.5 times, Sin Heng is slightly below the industry average of 0.6 times. However, its dividend yield at 11.0% is higher when compared to the industry average of 4.5%.

Conclusion

These Singaporean companies are currently trading at price-to-book ratios that are below 1 times, and have dividend yields above 10%.

With most markets in the world are deep in the red, the resilient Singapore’s market presents a potential opportunity for investors to accumulate some cheap, high-yielding dividend companies.

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