On this wonderful weekend I have run some screener and did analysis with TRV Stock Analyzer to list down some of the possibly undervalued share listed in Bursa based on several criteria:

1. EV/EBIT

Enterprise value to earnings before interest and tax (EV/EBIT) is a way of deciding whether a share is cheap (a low number) or expensive relative to, say, its peers or the wider market.

It is similar to the commonly quoted price/earnings ratio (p/e), but modified to address some of that ratio’s weaknesses. For example, rather than using just the firm’s share price – which ignores debt – it uses enterprise value. That’s the combined value of debt (less cash balances) and equity funds in the business.

Criteria : EV/EBIT < 8

2. P/FCF (Price to Free Cash Flow)

Price to free cash flow is an equity valuation metric used to compare a company’s per share market price to its per share amount of free cash flow.

As price to free cash flow is a value metric, lower numbers generally indicate a company that is undervalued and whose stock is relatively cheap in relation to its free cash flow. Therefore, value investors favor companies with low or decreasing price to free cash flow values that indicate high or increasing free cash flow totals and relatively low stock share prices.

I have another article written on importance of FCF here.

Criteria : P/FCF < 10

3. Total Debt / Total Equity

Total Debt / Equity Ratio is a debt ratio used to measure a company’s financial leverage, calculated by dividing a company’s total debt by its stockholders’ equity.

Given that the debt/equity ratio measures a company’s debt relative to the total value of its stock, it is most often used to gauge the extent to which a company is taking on debts as a means of leveraging. A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. Aggressive leveraging practices are often associated with high levels of risk. This may result in volatile earnings as a result of the additional interest expense.

Criteria : Total Debt / Total Equity < 40%

4. Piotroski F Score

The Piotroski score is a discrete score between 0-9 which reflects nine criteria used to determine the strength of a firm’s financial position. The Piotroski score is used to determine the best value stocks, nine being the best.

F score is included for quality and value. Best way to filter out bad stocks so that it doesn’t cloud the results.

Criteria : Piotroski F Score > 6

5. Dividend Yield

Who doesn’t like dividend? Dividend can provide some returns if the stock stays sideways for some time.

Criteria : Dividend Yield > 3%


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The result is as table below:

Stock Code

 Current Price EV/EBIT P/FCF T. Debt / T. Equity Net Profit Margin Dividend Yield Piotroski F Score

CHINWEL

 1.590 5.16 5.03 4.5% 11.9% 5.2%

8

CSCSTEL

 1.480 3.76 6.56 0.0% 6.2% 5.4%

8

ECS

 1.500 5.96 8.14 0.0% 1.5% 7.2%

6

FAVCO

 2.330 1.65 4.03 7.4% 10.7% 6.4%

7

FLBHD

 1.720 2.37 5.57 0.0% 15.5% 8.8%

6

FPI

 0.800 1.12 9.34 0.0% 5.7% 9.2%

9

JAYCORP

 1.170 6.67 5.88 16.7% 6.1% 3.5%

8

JCY

 0.640 6.44 6.01 7.5% 7.4% 11.2%

7

LIIHEN

 3.400 6.01 8.61 13.2% 11.3% 5.9%

9
SHH 2.110 4.68 5.86 8.7% 12.3% 4.7%

9

SHL

 3.140 4.82 6.01 0.1% 34.3% 4.5%

8
TIENWAH 1.740 6.86 4.04 19.4% 10.3% 10.4%

9

So, which one are you interested to invest in? any reasoning?