Top 3 Undervalued Stocks in 2020


1. DBS

DBS is one of Southeast Asia's largest bank and has a market capitalisation of $53 billion in Singapore. DBS earnings has grown 8.9% over the past 5 years and earnings are forecast to grow 12.65% per year. Moreover, DBS has managed to always maintain a healthy balance sheet and are constantly improving the digitalisation of their financial and banking services. As of 2019, they had a net profit of $6.39 billion and paid out a dividend yield of 7.2%. They have a high and sustainable dividend payout ever since they adopted a more aggressive dividend payout strategy from 2018 (8.17% in 2018, 7.2% in 2019, 6.35% in 2020). In my opinion, DBS is extremely good blue chip stock to add to your portfolio now (Current Share price at $20.5) and you will definitely reap its rewards through both its dividend payouts and share growth. The management has been proven to be exceptionally capable and they are constantly putting in effort to innovate to ensure that DBS stays at the forefront of financial services in the Southeast Asian region. You can find out more about DBS performance through its annual reports here.


2. CapitaLand

CapitaLand Limited is one of Asia's largest real estate companies and has a portfolio of numerous properties and REITs worth over $100 billion. It has a market capitalisation of $15 billion and is currently trading at $2.86 per share. At its current share price, it has a P/B value of 0.62 (Price to book ratio measures the market valuation of a company relative to its net asset value, you can find out more here). Both earnings per share and revenue have increased consistently from 2015 to 2019 from 25 cents to 46.4 cents and $4.7 billion to $6.2 billion. CapitaLand Limited has a healthy balance sheet and they have consistently managed to keep their debt low. In addition, CapitaLand Limited has been consistently paying out dividends for 16 years at an average dividend yield of 3.6% for the past 5 years. You can check out the full financial summary of CapitaLand Limited here. In my opinion, CapitaLand Limited is currently trading at a massive discount and has a fair value of $3.9 (You can check out the various banks' fair values here). It is definitely an undervalued good stock for you to consider buying now. 


3. Mapletree NAC Trust

Mapletree NAC Trust is a commercial REIT that consists of properties in Japan, Hong Kong and China valued at $8 billion. It is strongly sponsored by Mapletree Investments Pte Ltd. It has a debt gearing ratio of 39% (Due to recent acquisition of 2 more properties in Japan). Mapletree NAC Trust has a diversified tenant portfolio and high tenant occupancy rate of 96.3%. It has a 8 year consistent dividend history and the average dividend yield for the past 5 years is 7.9%. It has been a rough 6 months for Mapletree NAC Trust due to the Hong Kong protests (which caused the closure of its Festival Walk Mall in Hong Kong) and the coronavirus pandemic which affected traffic in its malls in China. This has caused its share price to fall from $1.2 to $0.9 in a matter of months. It is trading at 0.7x P/Net Asset value and a dividend yield of 7.5% at its current share price. Mapletree NAC Trust is trading at a massive discount currently and has a fair value of $1.050 (You can check out the various fair values determined by banks here). The management has been shown to be capable and reliable throughout this pandemic crisis. For example, they are actively trying to diversify their portfolio through their recent acquisition of 2 more properties in Japan and they have managed to claim insurance to sustain their dividends. Furthermore, they have provided rental relief to their tenants and received a positive rental reversion. In my opinion, this is definitely one of the undervalued stocks in 2020 that you can add to your portfolio. You can find out more about Mapletree NAC Trust portfolio here.


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