Even though some book values appear unachievable, these stocks can narrow the P/B discount. Hongkong Land has moved from 0.3x P/B to 0.5x P/B because its management has a monetisation target and divested assets at book value.
An interesting stock is Tuan Sing, which is trading at 0.31x P/B but with a net debt to equity ratio (D/E) of more than 100%. Technically, Tuan Sing’s share price is testing a resistance at 30-31 cents. Its quarterly momentum and 21-day RSI have strengthened, and its 100- and 200-day moving averages have just made a positive cross at 27 cents.
Once the stock clears 31 cents decisively, a target of 45 cents is possible.
See also: Rotational interest settles on an unexpected sector
The stock is unlikely to get up to its book value of some 90 cents or thereabouts, not least because its balance sheet is asset heavy and not very liquid. Its debt-to-equity ratio (D/E) is a case in point. The company would need to take concrete steps through an asset monetisation strategy to realise at least some of its book value.
Other stocks in the real estate heavy list with less-illiquid balance sheets than Tuan Sing are Hotel Royal, Hiap Hoe, Hong Fok and Metro Holdings. To include Ho Bee Land would be a bit of a stretch as its D/E is above 50%.
See also: Small-caps attract speculative interest as STI dips below minor support
Elsewhere, Sembcorp Industries’ share price has formed a positive divergence with its quarterly momentum and 21-day RSI, which suggests that the $6 support level is likely to hold and prices may attempt a recovery.
The Straits Times Index (STI) continues to form its staircase-like uptrend. The direction is progressively upwards. A couple of US houses have given upsides of 6,000 for the STI. First though, it needs to get to 5,000.
