Cash Rich Companies

In such turbulent times, you would want to work for a cash rich company. There are still a lot of cash residing in many listed companies. Below are the companies within the top 100 biggest market cap with the most net cash:

1) Berkshire Hathaway $106bn
2) Bank of China $100.6bn
3) Industrial & Comm Bank of China $89bn
4) China Construction Bank $81.5bn
5) ExxonMobil $28.2bn
6) Apple $24.5bn
7) Cisco Systems $19.9bn
8) Microsoft $18.7bn
9) Google $14.4bn
10) Nintendo $11bn
11) Roche $9.9bn
12) Intel $9.8bn
13) Pfizer $9.7bn
14) Qualcomm $6.4bn
15) CNOOC $6.1bn
16) Visa $5.2bn
17) China Life $4.3bn
18) Nokia $4.1bn
19) Chevron $4bn
20) Genentech $2.9bn
21) Wyeth $2.7bn
22) Statoil Hydro $2.2bn
23) Oracle $1.8bn
24) Axa $1.7bn
25) Bristol Myers Squibb $1.2bn

Out of the top 100 biggest companies in the world, only 29 are in a net cash position. Cash within a company won't be valued at a premium if the company is perceived to be just sitting on it. Cash per share valuation will only be relevant if its a good M&A candidate, thus ruling out most China companies. Cash basically only creates a buffer for NTA valuation, which is good if you are breaking up the company or selling the company, or distributing them as dividends.

Many of the companies use their cash as investing/ corp acquisition strategy: Berkshire Hathaway, the bulk of tech companies and also drug companies - they will acquire strategic stakes to protect their turf or to fuel growth via acquisition.

Companies that uses cash to buyback shares might as well give back as dividends. I am always against share buybacks. Taking them private usually will not happen as the size is too big. Actually if KKR and TPG were to pool their resources together, in a bull market setting, they can very well take some of them private... but certainly not in current market conditions.

Locally, there are very sizable cash rich companies, but to compare on absolute basis is a bit one dimensional. A better measure would be to take the cash per share and divide it as a percentage of market price. All in RM.

Net Cash / Paid up / Cash Per Share / % of Mkt Price
MAS 4.4bn / 1.25bn / 3.52 / 109%
-admirable considering that the company has had to deal with very high jet fuel prices over the past few years, as long as Jala is at the helm, MAS can be a core long term holding
Resorts 4.15bn / 5.68bn / 0.73 / 30%
Genting 2.16bn / 3.69bn / 0.58 / 14.8%
- the cost overruns at Sentosa and slumping revenue at overseas subsidiaries may stretch demand on its cash hoard, share buybacks will have to take a backseat, cautious on both stocks
PetGas 1.53bn / 1.978bn / 0.77 / 7.8%
Sime Darby 1.16bn / 5.997bn / 0.19 / 3.2%
- very low cash position for the world' biggest plantation company, simmering problems with integration of other big plantation firms, avoid for now
Proton 1.14bn / 549m / 2.07 / 110%
- solid buy for cash if the company can be sold to a foreign carmaker, cash alone worth more than the stock, i.e. its auto assembly assets are valued at less than zero
Bursa 1bn / 519m / 1.92 / 33%
Malaysia Airports 766m / 1.1bn / 0.69 / 29.8%
UMW 745m / 521m / 1.42 / 26.7%
DIGI 504.8m / 750m / 0.67 / 2.8%
Bintulu Port 488m / 400m / 1.22 / 21.7%
- often ignored but a good, solid, conservative company, core holding
Star Pub 457m / 738m / 0.62 / 19%
YNH 323m / 356.6m / 0.90 / 75.4%
- one of the better managed property companies
Asiatic 279m / 752m / 0.37 / 8.7%
Amway 244m / 164.3m / 1.48 / 21.5%
Carlsberg 222m / 308m / 0.72 / 19.6%
JT 213m / 261.5m / 0.81 / 18%
TH Plant 204.6m / 196m / 1.04 / 77%
- another conservative plantation company, if it can boost its CPO yield, valuations will fly


p/s photo: Yuri Ebihara