SGX Stocks That May Be Priced Below Intrinsic Value In October 2024

October 23, 2024

As of October 2024, the Singapore market has been navigating a period of cautious optimism, with investors closely monitoring economic indicators and global financial trends. In this environment, identifying stocks that may be priced below their intrinsic value can offer potential opportunities for investors seeking to capitalize on market inefficiencies.

Top 5 Undervalued Stocks Based On Cash Flows In Singapore

Name	Current Price	Fair Value (Est)	Discount (Est)
Singapore Technologies Engineering (SGX:S63)	SGD4.70	SGD7.29	35.5%
Digital Core REIT (SGX:DCRU)	US$0.585	US$0.82	28.7%
Frasers Logistics & Commercial Trust (SGX:BUOU)	SGD1.11	SGD1.99	44.2%
Nanofilm Technologies International (SGX:MZH)	SGD0.825	SGD1.43	42.1%
Seatrium (SGX:5E2)	SGD1.97	SGD3.03	35.1%

Click here to see the full list of 5 stocks from our Undervalued SGX Stocks Based On Cash Flows screener.

Below we spotlight a couple of our favorites from our exclusive screener.

Digital Core REIT (SGX:DCRU)

Overview: Digital Core REIT (SGX: DCRU) is a Singapore-listed pure-play data centre real estate investment trust sponsored by Digital Realty, with a market cap of $759.55 million.

Operations: The company generates revenue primarily through its commercial real estate investment trust (REIT) segment, amounting to $70.76 million.

Estimated Discount To Fair Value: 28.7%

Digital Core REIT is trading at a significant discount to its estimated fair value of US$0.82, currently priced at US$0.59, which suggests potential undervaluation based on discounted cash flow analysis. Despite recent shareholder dilution and an unstable dividend track record, the REIT's earnings are projected to grow significantly by 96.09% annually, with revenue expected to increase by 12% per year—outpacing the Singapore market's growth rate. Recent financial results showed improved net income despite declining sales and revenue figures year-over-year.

SGX:DCRU Discounted Cash Flow as at Oct 2024

Nanofilm Technologies International (SGX:MZH)

Overview: Nanofilm Technologies International Limited, with a market cap of SGD537.14 million, offers nanotechnology solutions across Singapore, China, Japan, and Vietnam through its subsidiaries.

Operations: The company's revenue is derived from several segments, including Advanced Materials (SGD153.32 million), Industrial Equipment (SGD28.71 million), Nanofabrication (SGD18.37 million), and Sydrogen (SGD1.40 million).

Estimated Discount To Fair Value: 42.1%

Nanofilm Technologies International is trading at a substantial discount, with its current price of SGD 0.83 below the estimated fair value of SGD 1.43, highlighting potential undervaluation based on discounted cash flow analysis. Despite a net loss in the first half of 2024 and lower profit margins compared to last year, revenue growth forecasts exceed market averages at 16.1% annually, and earnings are expected to grow significantly by nearly 54% per year over the next three years.

SGX:MZH Discounted Cash Flow as at Oct 2024

Singapore Technologies Engineering (SGX:S63)

Overview: Singapore Technologies Engineering Ltd is a global technology, defence, and engineering company with a market cap of SGD14.65 billion.

Operations: The company's revenue is primarily derived from its Defence & Public Security segment at SGD4.54 billion, followed by Commercial Aerospace at SGD4.34 billion, and Urban Solutions & Satcom at SGD2.01 billion.

Estimated Discount To Fair Value: 35.5%

Singapore Technologies Engineering is trading at a significant discount, with its current price of SGD 4.70 below the estimated fair value of SGD 7.29, suggesting undervaluation based on discounted cash flow analysis. Recent earnings for the half year show sales increasing to SGD 5.52 billion and net income rising to SGD 336.53 million, reflecting strong financial performance. However, debt coverage by operating cash flow remains a concern despite forecasted revenue growth surpassing market averages at 6.4% annually.

SGX:S63 Discounted Cash Flow as at Oct 2024

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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