Friday, September 27, 2013

"Cash-Rich" Companies listed in SGX

During the last FOMC meeting, the FED has announced that no tapering of Quantitative Easing (QE) will be done. Suddenly, investors rejoice and the party continues to run on steroids. People are looking once more to enter on risky assets or companies with high leverage to maximize their returns while the FED is sustaining the amount of steroids. But should investors look to the defensive and start looking for companies with strong balance sheet to rebalance their portfolio instead?



We used to hear that "Cash is King". But strangely cash rich companies are usually not that popular to retail investors. These are the type of companies that usually pays out lesser dividends, smaller payout (compared with other aggressive companies) and use little or no leverage to increase their business. The stacked cash rich companies are seen by investors as one which the management does not know how to utilize on growing its business, which is why they prefer to keep cash in fixed short term deposits earning small interest income. But what if their Return on Assets (RoA) and Return on Equity (RoE) are already above average, even without the need for further financial leverage. Is it not desirable to keep cash in the balance sheet so when asset prices falls, they are able to take on the advantage on the situation? Well, different investors different thinking... and there are no right or wrong answers. But here are a few of the companies I have found that have a strong cash backing stacked in their balance sheet.

Boustead














Challenger














Neratel














Shengsiong














SIA Engineering














Supergroup














Vicom














What do you think of these cash-rich companies?


1 comment:

  1. I was drooling when I scrolled down that list, if not for their current price levels, I might just sweep them off the shelves like supermarket aunties during a bargain hunt!

    I am with you on that given the good fundamentals, even if they are hoarding cash, these companies present future upside. What investors will need to do is to be patient, place their faith on management to demonstrate they can utilise the cash well and generate additional shareholder value.

    Nice blog!
    Here's your little blogging brother aiming for financial freedom too!

    ReplyDelete

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