3 Cash Rich Companies Investors Should Know

By James Yeo //
October 30, 2020
COVID-19 has stunted growth of many companies and also put many companies out of business. Examples include the famous JCPenney and most recently, Robinsons closing down in Singapore. Other than facing a poor macro-economic outlook, most of the companies went bankrupt due to a heavy debt burden. In these tough times, one cannot stress the importance of the slogan - 'Cash is King'. Companies with ample cash on hand could leverage on the current situation to acquire companies at good prices and continue to expand while its competitors are reeling from the pain. With that, we have scoured out 3 companies with either a big warchest or positive cash flow generation.

#1 Sheng Siong Limited  

Sheng Siong Group Ltd. is one of the largest supermarket chains in Singapore with 64 outlets all across the island. The Group’s outlets are primarily located in retail locations in the heartlands of Singapore. The outlets are designed to provide its customers with both “wet and dry” shopping options including:
  • Wide assortment of live, fresh and chilled produce, such as seafood, meat and vegetables,
  • Processed, packaged
  • Preserved food products
  • General merchandise such as toiletries and essential household products.
Sheng Siong has developed a selection of housebrands to offer customers quality alternatives to national brands at substantial savings. Sheng Siong offers over 1200 products under its 18 housebrands, ranging from food products to paper goods. As of its latest business update for 3Q2020, Sheng Siong's revenue increased by an impressive 28.9% yoy to % to $327.3 million. Its net profit increased by even more at 54.4% yoy to S$31.8 million. It possesses a robust balance sheet with $209 mil in cash and cash equivalents and only $30 mil in debt. And this is even after it doubled its half-yearly dividends per share in Jun 2020. Sheng Siong last closed at $1.66, which values it at a P/E ratio of 32.7x. The dividend yield stands at a decent 2.15%.

#2 Fu Yu Corporation Limited

Fu Yu is now one of the largest manufacturers and suppliers of high-precision injection moulds and plastic parts in Asia. Currently, Fu Yu have 8 manufacturing plants in Singapore, Malaysia and China. The market it serves include the IT sector, telecommunications, automotive, medical, etc. As of its latest half-yearly report, Fu Yu’s revenue decreased by 26% to $71.6 million. Its net profit impressively increase by 46.3% to $7.38 million. Free cash flow came in at $16.9 million. As a result, cash balance of the company maintains at a sustainable level of  $101.6 million. Fu Yu is in a net cash position of $101.6 million and do not have any bank debts or bonds. Lease liabilities are the only form of interest payments that it has on its balance sheet. The company's selling and administrative expenses are at $13 million. This means that the company has enough cash to pay its workers and other expenses even if they do not sell any products for a whopping 7.5 years! Fu Yu last closed at $0.23 which values it at a P/E of 13.6x and dividend yield of 6.9%.

#3 Pan Hong Holdings Limited

Pan Hong is a niche property development firm headquartered in Hong Kong. The group started out in Zhejiang province and was one of the few foreign property developers in the region. Pan Hong has also started its involvement in biological technology. As of its latest annual report, Pan Hong’s revenue increased by a superb 120.1% to RMB 643.9 million. Its net profit increased correspondingly by 107.4% to RMB 113.6 million. Free cash flow came in at a RMB 36.04 million and its cash balance increased slightly to RMB $281.2 million. Pan Hong is in a net cash position of RMB 261.4 million. This puts it in a really strong position to win projects as its expenses only amount to RMB 38.4 million. That would mean the company can continue to run for a few years even if it does not have many projects. Pan Hong last closed at $0.11 which values it at a P/B of 0.39x and dividend yield of 3.59%.
Want to stay in the loop for top ideas and exclusive content, subscribe to our FREE newsletter here.
 Previous
Next

About the author James Yeo

Leave a Comment

Check Out Our Latest Articles

Oversea-Chinese Banking Corp – Steady Execution

Excerpts from UOBKayHian report Oversea-Chinese Banking Corporation (SGX: O39) Oversea-Chinese Banking Corp (OCBC) delivered a near-record net profit of S$1,944m in 2Q24 (+14% yoy), supported by strong net trading income and lower credit costs. NPL formation was benign at S$108m. Loan-loss coverage improved 24ppt yoy and 9ppt qoq to 156%, the highest among the local

Read More

Interest Rate Cut Effect: How REITs Can Outperform

For the past 2 years, the US Federal Reserve hiked interest rates to the present 5.25% to 5.5%, which is the highest since 2007. The sharp increases, coupled with high inflation led to lower DPU for most REITs due to higher financing costs. With impending interest rate cut by the FED, REIT investors could breathe

Read More

Mapletree Pan Asia Commercial Trust – Driving resilience

Excerpts from Maybank report Mapletree Pan Asia Commercial Trust (SGX: N2IU) Mapletree Pan Asia Commercial Trust (MPACT) 1Q25 DPU of SGD2.09cts fell 8.7% QoQ and -4.1% YoY, in line with our est. Forex headwinds and pockets of weakness in overseas markets offset growing contribution from Singapore assets. Reversion picked up in 1Q25 to +5.2% due to

Read More

3 Defensive REITs I Plan to Buy When the Market Crashes

The REIT sector have come under pressure this year and may face further downside when the US economy falls into a recession next year. We could see a more prolonged market correction this year similar to the correctio in the first week of August. When the market actually crashes in 2025 and 2026, it will

Read More