Businessman's desk with laptop, tablet,  smart phone and stationery. A business activity. Workplace. Office. Work in a team. Business school training. The web banner. Modern flat design.

30 Magic Formula Stocks In Singapore With High Rate of Return Trading At Cheap Prices

Alvin Chow
Alvin Chow

I would like to share how our new app can generate trade ideas for you via our strategy screeners.

We have 6 strategy screeners currently with the intention to add more in the future.

One of them is the Magic Formula. This is a famous value investing strategy devised by hedge fund manager, Joel Greenblatt. It was disclosed in his book, The Little Book That Still Beats The Market.

He just used two metrics to find businesses with high rate of return but trading at cheap stock prices. Thereafter, he identifies the top 30 stocks by ranking these two metrics. You can refer to this post for more details. (I just realised it was published almost 10 years ago! I’m old.)

I don’t know if you have tried looking for a Magic Formula screener. I tried and found that they are often paid tools while Joel Greenblatt offers the US version only. It was hard to apply it to other countries if you want to diversify internationally. It was also tedious and expensive to get the required data to perform the screening. You can see the proposed metrics are uncommon and hard to calculate:

  1. Return on Capital = (pre-tax operating earnings)/(tangible assets employed or Net Working Capital + Net Fixed Assets)
  2. Earnings Yield = (pre-tax operating earnings)/(enterprise value = market value of equity* + net interest-bearing debt) *including preference shares

Hence, we decided to create such strategy screens for free.

Using our screener, you can apply Magic Formula to 13 markets to identify the top 50 values stocks with high returns on capital.

You can use the free Magic Formula screener here.

I will elaborate on the top 30 results for the Singapore market in this post. I will also be removing the stocks that are suspended, or are on secondary listing and the SGX watchlist.

Joel Greenblatt warned about cherry picking from this screen and would suggest to buy them as a group if you want to pursue this strategy. Hold the portfolio for at least a few years and rebalancing annually. But I know most investors would still prefer to pick from the list. If so, please ensure you have studied the stocks well enough to make the buy decision.

#1 Azeus (SGX:BBW)

  • Price = $1.02
  • Earnings Yield = 121%
  • Return On Capital = 25%
  • PE = 11
  • Dividend Yield = 3.6%
  • Return On Assets = 9%
  • Return on Equity = 48%
  • See other metrics

Azeus Systems Holdings Ltd. engages in the provision of information technology consultancy services. It operates through the Professional IT Services and Azeus Products Sales segment. The Professional IT Services segment includes sale of project hardware and software, maintenance and support services, and business process outsourcing. The Azeus Product Sales segment markets proprietary products.

#2 AEM (SGX:AWX)

  • Price = $3.08
  • Earnings Yield = 22%
  • Return On Capital = 80%
  • PE = 10
  • Dividend Yield = 1.7%
  • Return On Assets = 23%
  • Return on Equity = 39%
  • See other metrics

AEM Holdings Ltd. engages in the provision of handling and test solutions. It operates through the following segments: Equipment Systems Solutions (ESS), System Level Test & Inspection (SLT-i), Micro-Electro-Mechanical Systems (MEMS), Test and Measurement Solutions (TMS) and Others. The ESS segment provides customized system solutions involving precise speed motion and mechanical design to both mass volume manufacturers and new technology development laboratories. The SLT-I segment provides solutions that bridge the growing gap between user applications and standard ATE coverage with IC designs and packaging techniques. The MEMS segment provides test solutions for Micro-Electro-Mechanical Systems and special wafer probing needs ranging from the R&D phase to high volume production and system-level testing which enables manufacturers to achieve the lowest cost-of-test, reduced time to market, effective process cycle, accurate stimulus, and high production yields. The TMS segment engages in the research, development, and production of advanced communications and industrial test solutions. The Others segment includes non allocated, dormant companies and other activities.

#3 Union Gas (SGX1F2)

  • Price = $0.26
  • Earnings Yield = 25%
  • Return On Capital = 31%
  • PE = 7
  • Dividend Yield = 7.1%
  • Return On Assets = 15%
  • Return on Equity = 27%
  • See other metrics

Union Gas Holdings Ltd. engages in the sale of fuel products. It operates through the following segments: Retail LPG (Domestic) Business; Retail LPG (Commercial) Business, Retail Station Business, and Corporate. The Retail LPG (Domestic) Business segment sells and distributes bottled LPG and LPG-related accessories, and provision of LPG-related services to domestic households. The Retail LPG (Commercial) Business segment offers LFG and LPG-related services to commercial customers. The Retail Station Business segment focuses on the retail sale of compressed natural gas (CNG) and diesel to vehicles through a CNG and diesel refilling station.

#4 Propnex (SGX:OYY)

  • Price = $0.525
  • Earnings Yield = 22%
  • Return On Capital = 35%
  • PE = 8
  • Dividend Yield = 5.2%
  • Return On Assets = 13%
  • Return on Equity = 29%
  • See other metrics

PropNex Ltd. engages in the real estate business. It operates through the following business segments: Agency Services, Project Marketing Services, Administrative Support Services, Property Management Services, Training Services, and Others. The Agency Services segment relates to services rendered in the sale and lease of public and private residential and commercial or industrial properties. The Project Marketing Services segment represents services rendered in the sale of new private residential development projects for third-party property developers in Singapore as well as overseas. The Administrative Support Services segment offers use of space and other ancillary services. The Property Management Services segment pertains to real estate management services rendered to private residential properties. The Training Services segment provides real estate related courses and training programs organized by the Group to salespersons.

#5 PEC (SGX:IX2)

  • Price = $0.485
  • Earnings Yield = 62%
  • Return On Capital = 22%
  • PE = 12
  • Dividend Yield = 4.1%
  • Return On Assets = 2%
  • Return on Equity = 4%
  • See other metrics

PEC Ltd. engages in the provision of mechanical engineering and contracting services. It operates through the following segments: Project Works, Plant Maintenance and Related Services, and Other Operations. The Project Works segment relates to the engineering, procurement, and construction services for certain aspects of plant projects, such as tankage and piping work, procurement to the oil and gas, petrol-chemical, pharmaceutical, and oil and chemical terminal industries. The Plant Maintenance and Related Services segment offers maintenance services to the oil and gas, petrochemical, pharmaceutical, and oil and chemical terminal industries. The Other Operations segment focuses on services provided through the company’s subsidiaries such as heat treatment, information technology services and products, and construction equipment leasing services.

#6 Fortress Minerals (SGX:OAJ)

  • Price = $0.20
  • Earnings Yield = 19%
  • Return On Capital = 39%
  • PE =11
  • Dividend Yield = 0%
  • Return On Assets = 16%
  • Return on Equity = 22%
  • See other metrics

Fortress Minerals Ltd. operates as a iron ore concentrate producer in Malaysia. It offers geological exploration, mining, processing and beneficiation of iron ore concentrate.

#7 Cortina (SGX:C41)

  • Price = $1.28
  • Earnings Yield = 28%
  • Return On Capital = 23%
  • PE = 6
  • Dividend Yield = 4.3%
  • Return On Assets = 10%
  • Return on Equity = 15%
  • See other metrics

Cortina Holdings Ltd. engages in the distribution and trade of watches. It operates through the following segments: Wholesale, Retail, and Others. The Wholesale segment involves in wholesale of timepiece and luxury branded accessories. The Retail segment involves in retailing of timepiece, branded pens and accessories. The Others segment includes provision of other support services.

#8 RH PetroGas (SGX:T13)

  • Price = $0.038
  • Earnings Yield = 15%
  • Return On Capital = 214%
  • PE = 9
  • Dividend Yield = 0%
  • Return On Assets = 5%
  • Return on Equity = -17%
  • See other metrics

RH Petrogas Ltd. is an investment holding company. The firm engages in the exploration and production of oil and gas resources. It focuses in the Asia region with existing assets in China, Indonesia and Malaysia. 

#9 Ouhua Energy (SGX:AJ2)

  • Price = $0.019
  • Earnings Yield = 73%
  • Return On Capital = 18%
  • PE = 3
  • Dividend Yield = 0%
  • Return On Assets = 3%
  • Return on Equity = 8%
  • See other metrics

Ouhua Energy Holdings Ltd. is an investment company, which engages in the import, processing, storage, and distribution of liquefied petroleum gas. It operates through the following geographical segments: People’s Republic of China and Asia Pacific. 

#10 Hyphens Pharma (SGX:1J5)

  • Price = $0.32
  • Earnings Yield = 22%
  • Return On Capital = 22%
  • PE = 13
  • Dividend Yield = 3.1%
  • Return On Assets = 8%
  • Return on Equity = 15%
  • See other metrics

Hyphens Pharma International Ltd. is an investment holding company, which engages in the provision of specialty pharmaceutical and consumer healthcare products. It operates through the following segments: Specialty Pharma Principals, Proprietary Brands, and Medical Hypermart and Digital. The Specialty Pharma Principals segment focuses in marketing and selling a range of specialty pharmaceutical products. The Proprietary Brands segment involves in the development, marketing, and selling its own proprietary range of dermatological products and health supplement products. The Medical Hypermart and Digital segment deals with wholesaling of pharmaceuticals and medical supplies.

#11 Shopper360 (SGX:1F0)

  • Price = $0.095
  • Earnings Yield = 40%
  • Return On Capital = 17%
  • PE = 6
  • Dividend Yield = 3.0%
  • Return On Assets = 7%
  • Return on Equity = 10%
  • See other metrics

Shopper360 Ltd. is an investment holding company, which engages in the provision of shopper marketing services. It operates through the following business segments: In-Store Advertising and Digital Marketing; Field Force Management; Sampling Activities and Events Management; and Investment Holding. The In-Store Advertising and Digital Marketing segment offers digital and non-digital in-store advertising mediums in retail chains. The Field Force Management segment comprises of merchandiser, sales force and supervisory, and talent management services. The Sampling Activities and Events Management segment provides in-store promoter services. The Investment Holding segment covers management and corporate services provided to its subsidiaries.

#12 Valuetronics (SGX:BN2)

  • Price = $0.625
  • Earnings Yield = 27%
  • Return On Capital = 18%
  • PE = 7
  • Dividend Yield = 7.0%
  • Return On Assets = 10%
  • Return on Equity = 17%
  • See other metrics

Valuetronics Holdings Ltd. is an investment company, which engages in the provision of electronics manufacturing services. It operates through the Consumer Electronics; and Industrial and Commercial Electronics segments. The Consumer Electronics segment includes consumer electronic products. The Industrial and Commercial Electronics segment offers industrial and commercial electronics products.

#13 Powermatic Data Systems (SGX:BCY)

  • Price = $2.63
  • Earnings Yield = 51%
  • Return On Capital = 16%
  • PE = 9
  • Dividend Yield = 3.0%
  • Return On Assets = 11%
  • Return on Equity = 12%
  • See other metrics

Powermatic Data Systems Ltd. is an investment holding company, which engages in the design and manufacture of wireless connectivity devices and provision of wireless solutions. It operates through the following segments: Wireless Connectivity products and Freehold Investment Property. The Wireless Connectivity Products segment comprises manufacture, marketing, and distribution of wireless connectivity products. The Freehold Investment Property involves in the lease and maintenance of Harrison Industrial Building.

#14 Medinex (SGX:OTX)

  • Price = $0.21
  • Earnings Yield = 15%
  • Return On Capital = 26%
  • PE = 27
  • Dividend Yield = 4.0%
  • Return On Assets = 5%
  • Return on Equity = 6%
  • See other metrics

Medinex Ltd. is an investment holding company, which engages in the provision of business and management consultancy services to the medical sector. It operates through the following segments: Medical Support Services, Business Support Services, and Pharmaceutical Services. The Medical Support Service segment offers professional services to clients in primary and secondary healthcare sectors comprising general practitioners and specialists. The Business Support Services segment covers professional services to customer base who are outside from healthcare industry. The Pharmaceutical Services segment distributes medical and pharmaceutical products to clinics located in Singapore.

#15 China Sunsine (SGX:QES)

  • Price = $0.40
  • Earnings Yield = 31%
  • Return On Capital = 17%
  • PE = 5
  • Dividend Yield = 2.5%
  • Return On Assets = 14%
  • Return on Equity = 16%
  • See other metrics

China Sunsine Chemical Holdings Ltd. is an investment company, which engages in the production specialty chemical, rubber accelerators, and insoluble sulphur. It operates through the following segments: Rubber Chemicals and Heating Power. The Rubber Chemicals segment manufactures and sells rubber chemicals. The Heating Power segment focuses on the production and supply heating power.

#16 Dutech (SGX:CZ4)

  • Price = $0.26
  • Earnings Yield = 73%
  • Return On Capital = 15%
  • PE = 6
  • Dividend Yield = 0%
  • Return On Assets = 5%
  • Return on Equity = 8%
  • See other metrics

Dutech Holdings Ltd. engages in designing and manufacturing of security products. It operates through the High Security and Business Solutions segment. The High Security segment designs and manufactures automated teller machine safes, fire-resistant commercial safes, safes for storage of weapons, and other security products. The Business Solutions segment provides business solutions by designing, engineering, manufacturing, and assembling electro-mechanical equipment and modules, precision engineering parts, semi-conductor instruments, and other products.

#17 Hour Glass (SGX:AGS)

  • Price = $0.66
  • Earnings Yield = 28%
  • Return On Capital = 16%
  • PE = 6
  • Dividend Yield = 4.6%
  • Return On Assets = 11%
  • Return on Equity = 13%
  • See other metrics

The Hour Glass Ltd. is an investment holding company, which engages in the retail and distribution of watches, jewelry, and other luxury products. It operates through the South East Asia and Australia,; and North East Asia geographical segments.

#18 Yongmao (SGX:BKX)

  • Price = $0.67
  • Earnings Yield = 33%
  • Return On Capital = 15%
  • PE = 3
  • Dividend Yield = 4.5%
  • Return On Assets = 4%
  • Return on Equity = 9%
  • See other metrics

Yongmao Holdings Ltd. engages in the manufacture, sale, and rental of tower cranes and construction machinery. It operates through the following geographical segments: The PRC and Hong Kong & Macau. The PRC segment relates to the manufacture and sale, with some rental and servicing of tower cranes and tower crane components and accessories. The Hong Kong & Macau segment offers rental, servicing, and sale of tower cranes and tower crane components and accessories.

#19 SingMedical (SGX:5OT)

  • Price = $0.24
  • Earnings Yield = 11%
  • Return On Capital = 57%
  • PE = 9
  • Dividend Yield = 3.3%
  • Return On Assets = 7%
  • Return on Equity = 9%
  • See other metrics

Singapore Medical Group Ltd. is an investment holding company, which engages in the management of medical clinics; and provision of general medical services. It operates through the following segments: Health Business, Diagnostic and Aesthetics Business, and Others. The Health Business segment provides general ophthalmological, orthopedic, oncology, obstetrical and gynecological, otolaryngology, dermatology, general medicine and health screening, and pediatrics services. The Diagnostic and Aesthetics Business segment offers radiology and diagnostic imaging, refractive surgery, dental, and aesthetics medicine services. The Others comprises of group-level corporate services and business consultancy functions. 

#20 Excelpoint (SGX:BDF)

  • Price = $0.32
  • Earnings Yield = 13%
  • Return On Capital = 24%
  • PE = 32
  • Dividend Yield = 0%
  • Return On Assets = 0%
  • Return on Equity = 2%
  • See other metrics

Excelpoint Technology Ltd. is an investment holding company, which engages in the trading of electronics equipment, sale and distribution of electronic components and dealers of all types of electronic and electrical components and accessories. It operates through the following business segments: Hong Kong Business Unit, Singapore Business Unit, and Corporate Unit. The Hong Kong Business Unit segment covers the business entities located in Hong Kong, and the People’s Republic of China. The Singapore Business Unit segment focuses on entities located in Southeast Asia and India. The Corporate Unit segment comprises of the corporate services, treasury functions, investment securities, and other dormant companies.

#21 Moya (SGX:5WE)

  • Price = $0.066
  • Earnings Yield = 14%
  • Return On Capital = 23%
  • PE = 17
  • Dividend Yield = 0%
  • Return On Assets = 3%
  • Return on Equity = 6%
  • See other metrics

Moya Holdings Asia Ltd. is an investment company, which engages in the development and operation of water treatment facilities. It focuses on build-operate-transfer that provides a comprehensive range of water solutions to government including commissioning, maintenance of water treatment plants on design, build, operate, and transfers arrangements. 

#22 Avi-Tech (SGX:BKY)

  • Price = $0.39
  • Earnings Yield = 69%
  • Return On Capital = 14%
  • PE = 11
  • Dividend Yield = 4.6%
  • Return On Assets = 8%
  • Return on Equity = 14%
  • See other metrics

Avi-Tech Electronics Ltd. engages in the design and manufacture of burn-in and related services, provision of engineering services, and trading of imaging equipment and energy efficient products. It operates through the following segments: Burn-in Services; Manufacturing and Printed Circuit Board Assembly Services, and Engineering. The Burn-in Services segment refers to the process whereby the individual integrated circuit chips are stressed at high temperature to weed out any defects caused during the assembly process. The Manufacturing and Printed Circuit Board Assembly Services segment comprises the assembly of printed circuit boards used for burn-in and reliability testing of integrated circuit chips. The Engineering segment includes the system integration projects, equipment manufacturing, technical services, and distribution of third party products.

#23 Frencken (SGX:E28)

  • Price = $0.815
  • Earnings Yield = 17%
  • Return On Capital = 19%
  • PE = 8
  • Dividend Yield = 3.7%
  • Return On Assets = 8%
  • Return on Equity = 14%
  • See other metrics

Frencken Group Ltd. is an investment holding company, which engages in the provision of global technology capital equipment, automotive, and consumer product solutions. It operates through the following segments: Mechatronics, and Integrated Manufacturing Services (IMS), Investment Holding and Management Services, and Other. The Mechatronics segment focuses in the design and manufacture of complex electro-mechanical assemblies and automation systems for original equipment manufacturers. The IMS segment deals with one-stop integrated solution to manufacture plastic components PCBAs for assembly into modules and finished products. The Other segment includes investment property holding.

#24 Sunpower (SGX:5GD)

  • Price = $0.47
  • Earnings Yield = 11%
  • Return On Capital = 36%
  • PE = 6
  • Dividend Yield = 0.5%
  • Return On Assets = 2%
  • Return on Equity = 8%
  • See other metrics

Sunpower engages in the design, manufacture, and research and development of customized energy saving, energy-efficiency, and environmental protection products and solutions. It operates through the following segments: Environmental Equipment Manufacturing (EEM), Engineering, Procurement, and Construction (EPC) Integrated Solutions, and Green Investments. The EEM segment offers heat exchangers and pressure vessels, heat pipes and heat pipe exchangers, pipeline energy saving products, and related environmental protection products. The EPC Integrated Solutions segment comprises of energy saving systems such as flare-gas recovery system; sulfur recovery system and Zero Liquid Discharge system; photovoltaic power generation and clean energy related petrochemical engineering; engineering, procurement and construction of build-operate-transfer or transfer-operate-transfer or build-operate-own projects. The Green Investment segment includes technology on pulverized-coal combustion and long distance heat insulating steam pipelines.

#25 Golden Energy (SGX:AUE)

  • Price = $0.174
  • Earnings Yield = 20%
  • Return On Capital = 16%
  • PE = 30
  • Dividend Yield = 7.4%
  • Return On Assets = 1%
  • Return on Equity = 3%
  • See other metrics

Golden Energy & Resources Ltd. engages in the exploration, mining, marketing, and trading of thermal coal. It operates through the following segments: Coal Mining, Coal Trading, and Non-Coal Business. The Coal Mining segment involves in the exploration, mining, processing, and marketing of thermal coal from its coal mining concession areas. The Coal Trading segment includes procuring sales orders from customers and sourcing for domestic suppliers. The Non-Coal segment comprises forestry, investment holding company, and provision of management services.

#26 JB Foods (SGX:BEW)

  • Price = $0.49
  • Earnings Yield = 12%
  • Return On Capital = 24%
  • PE = 4
  • Dividend Yield = 5.7%
  • Return On Assets = 7%
  • Return on Equity = 19%
  • See other metrics

JB Foods Ltd. is an investment holding company. The firm engages in the production and sale of cocoa ingredient products. Its products include cocoa butter, cocoa powder, cocoa liquor and cocoa cake under the brand JBCOCOA.

#27 BRC Asia (SGX:BEC)

  • Price = $1.31
  • Earnings Yield = 13%
  • Return On Capital = 22%
  • PE = 7
  • Dividend Yield = 6.1%
  • Return On Assets = 5%
  • Return on Equity = 12%
  • See other metrics

BRC Asia Ltd. Engages in the prefabrication of steel reinforcement for use in concrete, trading of steel reinforcing bars. It also engages in manufacturing and sale of wire mesh fences. 

#28 Singapore O&G (SGX:1D8)

  • Price = $0.20
  • Earnings Yield = 10%
  • Return On Capital = 46%
  • PE = -83
  • Dividend Yield = 3.1%
  • Return On Assets = -2%
  • Return on Equity = -3%
  • See other metrics

Singapore O&G Ltd. is an investment holding company. The firm engages in the provision of medical and management services. It operates through the following segments: Obstetrics and Gynecology, Cancer-Related, Dermatology and Pediatrics. The Obstetrics and Gynecology segment includes general obstetrics, labor and delivery, general gynecology and surgery, female pelvic medicine, urogynecology and reconstructive surgery. The Cancer-Related segment relates to medical services for gyne-oncology, breast and general surgery. The Dermatology offers aesthetic dermatological procedures, dermatologic and a laser surgery and general skin care. The Pediatrics segment provides general pediatrics and adolescent medical services.

#29 Micro-Mechanics (SGX:5DD)

  • Price = $1.77
  • Earnings Yield = 10%
  • Return On Capital = 33%
  • PE = 18
  • Dividend Yield = 5.1%
  • Return On Assets = 19%
  • Return on Equity = 20%
  • See other metrics

Micro-Mechanics (Holdings) Ltd. engages in the designs, manufactures, and markets high precision tools, parts, and assemblies for the semiconductor, medical, and aerospace industries. Its products include wire cutter blades, rubber tips, clamps with inserts, and large wire equipment.

#30 Vividtree (SGX:OMK)

  • Price = $0.05
  • Earnings Yield = 15%
  • Return On Capital = 18%
  • PE = 5
  • Dividend Yield = 0%
  • Return On Assets = 11%
  • Return on Equity = 12%
  • See other metrics

Vividthree Holdings Ltd. is an investment holding company, which engages in the motion picture, video, and television program post-production activities. It operates through the Post-Production Services and Content Production Services segments. The Post-Production Services segment offers services in visual effects and immersive media works for feature films and commercials. The Content Production Services segment involves in the production of virtual reality with incorporate immersive experience. 

If you find this list useful, you should explore the rest of the strategy screeners!

Alvin Chow
Alvin Chow
CEO of Dr Wealth. Built a business to empower DIY investors to make better investments. A believer of the Factor-based Investing approach and runs a Multi-Factor Portfolio that taps on the Value, Size, and Profitability Factors. Conducts the flagship Intelligent Investor Immersive program under Dr Wealth. An author of Secrets of Singapore Trading Gurus and Singapore Permanent Portfolio. Featured on various media such as MoneyFM 89.3, Kiss92, Straits Times and Lianhe Zaobao. Given talks at events organised by SGX, DBS, CPF and many others.
Read These Next

4 thoughts on “30 Magic Formula Stocks In Singapore With High Rate of Return Trading At Cheap Prices”

  1. Thanks Alvin! I have been studying how to generate this list for local market so this is very helpful. According to magic formula strategy, we are supposed to invest 5 to 7 stocks ever quarter. However, I find the brokerage fee very expensive, minimal $10 per stock, to implement this strategy. What advice do you have?

    Reply
    • reduce the number of stocks to buy by increasing the quantum for each investment. My rule of thumb is to keep the comms to a maximum of 1% of the invested amount. $10/1% = $1000. Invest minimally $1k per stock.

      Reply
  2. Thanks for the list, Alvin!

    Before ROC and ROE, I’ve seen some that use them interchangeably. How do you treat these 2 metrics? Does one matter more than the other in any particular way, or you also use them interchangeably?

    Reply
    • They are different. And the way Joel Greenblatt calculated the ROC is different as well. ROC includes but debt and equity while ROE only considers equity. So they are not interchangeable. Most importantly use what can make you understand the stock better.

      Reply

Leave a Comment