The real estate sector performs relatively in-line with the wider economy. Prosperous periods bring about high growth and inflation, leading to strong returns in real estate investments. Debao Property Development and CWG International are real estate stocks on my list that are potentially undervalued, which means their current share prices are trading well-below what the companies are actually worth. Investors can determine how much a cyclical company is worth based on how much money they are expected to make in the future, or compared to the value of their peers. The list I’ve put together below are of stocks that compare favourably on all criteria, which potentially makes them good investments if you believe the price should eventually reflect the stock’s actual value.
Debao Property Development Ltd. (SGX:BTF)
Debao Property Development Ltd., an investment holding company, operates as an integrated property developer in the People’s Republic of China. Debao Property Development was formed in 2000 and with the company’s market cap sitting at SGD SGD12.07M, it falls under the small-cap stocks category.
BTF’s shares are currently floating at around -99% less than its actual level of ¥17.18, at a price of S$0.16, based on my discounted cash flow model. The divergence signals an opportunity to buy BTF shares at a low price. Also, BTF’s PE ratio is trading at around 1.72x against its its Real Estate peer level of, 10.21x suggesting that relative to its comparable set of companies, we can purchase BTF’s shares for cheaper. BTF is also a financially robust company, as current assets can cover liabilities in the near term and over the long run. More detail on Debao Property Development here.
CWG International Ltd. (SGX:ACW)
CWG International Ltd. engages in the development of real estate properties. Founded in 2002, and headed by CEO Jianrong Qian, the company size now stands at 479 people and with the stock’s market cap sitting at SGD SGD128.44M, it comes under the small-cap group.
ACW’s stock is currently trading at -97% beneath its intrinsic value of ¥5.84, at a price of S$0.19, based on its expected future cash flows. This discrepancy signals a potential opportunity to buy ACW shares at a low price. Moreover, ACW’s PE ratio is around 3.07x compared to its Real Estate peer level of, 10.21x suggesting that relative to its competitors, you can buy ACW’s shares at a cheaper price. ACW is also strong financially, as near-term assets sufficiently cover liabilities in the near future as well as in the long run. Continue research on CWG International here.
Hiap Hoe Limited (SGX:5JK)
Hiap Hoe Limited, an investment holding company, develops luxury and mid-tier residential, and hotel-cum-commercial properties in Australia and Singapore. Hiap Hoe was started in 1994 and with the company’s market cap sitting at SGD SGD418.80M, it falls under the small-cap category.
5JK’s shares are currently floating at around -46% lower than its true level of $1.65, at a price of S$0.89, based on its expected future cash flows. This difference in price and value gives us a chance to buy low. Moreover, 5JK’s PE ratio is around 5.2x against its its Real Estate peer level of, 10.21x indicating that relative to its comparable set of companies, you can purchase 5JK’s stock for a lower price right now. 5JK is also a financially robust company, with near-term assets able to cover upcoming and long-term liabilities. Interested in Hiap Hoe? Find out more here.
For more financially sound, undervalued companies to add to your portfolio, explore this interactive list of undervalued stocks.