Which Blue-Chip Property Developer Is The Cheapest Now?
- Original Post from The Motley Fool Sg

Property stocks took a beating in July when the Singapore government implemented additional property cooling measures. Since then, private condominium prices have declined for two straight months, and analysts expect further corrections in the months ahead.


That said, I still believe the long-term prospects of property in Singapore remains sound. The Monetary Authority of Singapore has said that it wants property prices to rise reasonably and in tandem with wage increases. As such, over the much longer time frame, property prices should increase as wages rise in Singapore.


With property stocks trading some way off their peak, now may be a good time to look for bargains. Here’s a quick look at how the three blue-chip property stocks are valued now.


Price-to-book ratio


The price-to-book ratio is a comparison between the price of a stock and its book value per share. In theory, a stock that is trading at a discount to its book value can pose good value. If a company liquidates its assets and returns the cash to shareholders, investors stand to gain from the price-book value mismatch.


The three property stocks that are part of the Straits Times Index (SGX: ^STI)UOL Group Limited (SGX: U14), CapitaLand Limited (SGX: C31) and City Developments Limited (SGX: C09) – each trade below their book values. The table below shows the price-to-book ratios of the three companies right now.



Source: Author’s compilation and computation of data from Morningstar


As you can see, all three property stocks are trading well below their book values and also below their five-year average. On average, they are selling at a 21.8% discount to their respective averages, with City Developments currently trading at the biggest discount compared to its past.


UOL, however, has the lowest price-to-book ratio currently.


The Foolish bottom line


Clearly, the market does not seem to like Singapore property stocks right now. There is minimal visibility on how the property market in Singapore will move over the next few quarters, and the government has shown that it is not afraid to step in to cool the market if optimism goes out of hand.


However, over the longer time frame, properties in Singapore are most likely going to appreciate as population and wages grow. The long-term fundamentals are intact for these three companies that own, manage and develop properties in Singapore and regionally. With prices well below their historical average, now may be an opportune time to get in cheap.


$CityDev(C09.SI) $CapitaLand(C31.SI) $UOL(U14.SI)

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alagiejaiteh

Can there be a telephone contact before going in to the matter, as I have few questions


Recommended & Related Posts

1 Simple Number for Understanding 3 Important Areas of UOL Group Limited
- Original Post from The Motley Fool Sg

UOL Group Limited (SGX: U14) is a property company involved in property development and management, property investments, and hotel businesses.


Let’s examine the conglomerate using one simple metric: the return on investment, or ROE.


Why ROE?


But why should we use the ROE?


This financial metric gives investors important insight on a company’s ability to generate a profit using the shareholders’ capital it has. An ROE of 20% means a company generates S$0.20 in profit for every dollar of shareholders’ capital invested. In general, the higher the ROE, the more profitable a company is. A high ROE can also be a sign that a company has a high-quality business.


That being said, it’s worth noting that the use of high leverage – which increases the financial risk faced by a company – can also increase a company’s ROE.


Calculating the ROE


The ROE can be calculated using the following commonly used formula:


ROE = net profit / shareholder’s equity


The ROE can also be calculated using a different approach, as shown below:


ROE = asset turnover x net profit margin x leverage ratio


Doing so will reveal three important aspects about a company: How well it is managing its assets, how efficient it is at turning revenue into profit, and how much financial risk it could be taking on.Click here for more information about using this formula to calculate the ROE.


Let’s turn our attention to the ROE of UOL Group.


The acid test


Asset turnover measures a company’s efficiency in using its assets to generate revenue. It is calculated by dividing a company’s total revenue by its assets.


UOL Group had total revenue of S$2.1 billion and total assets of S$19.6 billion in its fiscal year ended 31 December 2017 (FY2017). These two figures giveus an asset turnover of 0.107.


The net profit margin measures the percentage of revenue that is left as a profit after deducting all expenses. For FY2017, UOL Group had a net profit margin of 47%, based its net profit of S$987 million and revenue of S$2.1 billion.


Lastly, we have the leverage ratio, which shows the relationship of a company’s total assets to its equity. It is calculated by dividing total assets by equity.Ahigher ratio means a company is funding its assets with more liabilities, resulting in higher risk.In FY2017, UOL Group had total assets and total equity of S$19.6 billion and S$14.1 billion, respectively. The two numbers combine to gives it a leverage ratio of 1.4.


When we put all the numbers together, we arrive at an ROE of 7% for UOL Group.


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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.



$UOL(U14.SI)

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1 Simple Number To Understand 3 Important Areas Of City Developments Limited
- Original Post from The Motley Fool Sg

City Developments Limited (SGX: C09), or CDL for short, is a real estate company. Its segments include property development, hotel operations, rental properties and others.In this article, I want to dig deep into City Developments’ return on equity, or ROE.


The choice of ROE


Why ROE, some of you might be asking? That’s because the financial metric gives investors important insights on a company’s ability to generate a profit using the shareholders’ capital it has.


A ROE of 20% means that a company generates $0.20 in profit for every dollar of shareholders’ capital invested. In general, the higher the ROE, the more profitable a company is. A high ROE can also be a sign that a company has a high-quality business.


That being said, it’s worth noting that the use of high leverage – which increases the financial risk faced by a company – can also increase a company’s ROE. So, that’s something to observe.


Calculating the ROE


The ROE can be calculated using the following formula, which is the way many investors do it:


ROE = Net Profit / Shareholder’s Equity


But, the ROE can also be calculated using a different approach shown below:


ROE = Asset Turnover x Net Profit Margin x Leverage Ratio


Doing so will reveal three important aspects about a company: how well it is managing its assets, how efficient it is at turning revenue into profit, and how much financial risk it could be taking on. For more information about this formula for the ROE, you can check outhere.


With that, let’s turn our attention to the ROE of City Developments.


The actual numbers


The asset turnover measures the efficiency of a company in using its assets to generate revenue. It is calculated by dividing a company’s total revenue by its assets.


For City Developments, it had total revenue of S$3.8 billion and total assets of S$19.5 billion in its fiscal year ended 31 December 2017 (FY2017). This gives an asset turnover of 0.195.


The net profit margin measures the percentage of revenue that is left as a profit after deduction of all expenses.In FY2017, City Developments had a net profit margin of 17.8%, given its net profit of S$675.0 million and revenue of S$3.8 billion.


Lastly, we have the leverage ratio, which shows the relationship of a company’s total assets to its equity. It is calculated by dividing total assets by equity.Ahigher ratio means that a company is funding its assets with more liabilities, hence resulting in higher risk.In FY2017, City Developments had total assets and total equity of S$19.5 billion and S$11.8 billion respectively. This gives a leverage ratio of 1.7.


When we put all the numbers together, we arrive at an ROE of 6%.


$CityDev(C09.SI)

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The Weekly Nibble: Starter Stock for New Investors
- Original Post from The Motley Fool Sg

Here are some of the most popular articles that have appeared on The Motley Fool Singapore’s website for the week.


1 Blue-Chip Share to Buy If You Are New to Investing


With more than 700 shares to choose from in Singapore’s stock market, you would be forgiven for thinking that it’s challenging to select your first share to start your investment journey.


To help new investors get started in their first stock investment, I discussed a stable company that pays an above-average dividend yield in this article.


Is CapitaLand Limited’s (SGX: C31) Share Price A Bargain Now?


In 2018, CapitaLand Limited’s (SGX: C31) share price fell 12%. Given the share price weakness, is the property giant still a bargain?


Here, Chin Hui Leong and Esjay jointly checked out if the company offers value at the current share price using different valuation methods. The conclusion is that CapitaLand might indeed be a bargain. Jump into the article to know more.


2 Singapore REITs That Retirees Will Love


If you are retiring and would like to park your money in stable investment vehicles, you should check out this piece written by Jeremy Chia. He discusses two real estate investment trusts (REITs) listed in Singapore that:


1) Are resilient to economic downturns;


2) Have predictable and stable distributions; and


3) Have relatively high distribution yields.


$CapitaLand(C31.SI)

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Is City Development A Bargain Now?
- Original Post from The Motley Fool Sg

City Developments Limited (SGX: C09), or CDL, is a real estate company listed on the Singapore market, with a presence 28 different countries and regions.


Its business segments within the real estate segment include property development, hotel operations and rental properties.


between 1 Jan to 31 Dec 2018, CDL’s share price including reinvested dividends, dropped by 33.8% compared to a drop of 6.5% for the Straits Times Index (SGX: ^STI).


So, is a bargain at current prices?


For this we will be using four metrics, namely, its price-to-earnings (P/E) ratio, its price-to-book (P/B) ratio, its dividend yield and its net-debt-to-equity ratio.


The real estate conglomerate has a trailing twelve months (TTM) earnings per share of S$0.66. The company’s current share price stands at S$8.85. So, its P/E ratio is 13.4, which is lower than its one-year historical PE ratio of 16.


Its EPS over the past four years (2014-2017) has been between S$0.58 to S$0.83, indicating that its current TTM EPS is in the middle of the range.


At the end of the third quarter of 2018, CDL reported a net asset value (NAV) of S$11.2. This results in a P/B ratio of 0.79 at current prices.


A company with a P/B ratio of less than 1 implies that investors are getting the assets held by the company for a discount. This could provide a margin of safety for investors.


For reference, CDL’s NAV has been steadily increasing over the past four years, rising moving from S$9.25 in 2014 to S$10.54 in 2017. This could show that CDL is consistently increasing value for its shareholders.


At the end September 2018, the real estate conglomerate had net debt of S$2.8 billion and total equity of S$12.4 billion, indicating a net-debt-to-total equity ratio of 23%. This is in line with its four-year (2014-2017) range from 9% to 26%, although it’s at the higher end of the range. A 23% net-debt-to-equity ratio is considered relatively conservative.


Lastly, CDL’s dividend has increased slightly over the last four years from S$0.16 per share in 2014 to S$0.18 per share in 2017.


However, investors should note that the dividends include special payouts, from 2014 to 2016 and increased slightly in 2017. Assuming CDL pays out a dividend at the same rate as 2017, this would lead to a yield of 2.03% at current prices.


Looking at the four metrics, it seems like CDL might be a bargain at current prices. All four metrics point towards its valuations being on the attractive side. It could be worth a closer look.


$STI(^STI.IN) $CityDev(C09.SI)

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Singapore’s Top 5 Blue-Chip Shares with the Highest Dividend Yields
- Original Post from The Motley Fool Sg

The blue-chip shares of the Straits Times Index (SGX: ^STI) all pay a dividend, with an average dividend yield of 3.6%. However, some of the index stocks have way higher dividend yields. Here, let’s look at the top five blue-chip shares that have the best dividend yields (data as of 17 January 2019).


Blue-chip #1


Coming in first isHutchison Port Holdings Trust(SGX: NS8U) with a distribution yield of 9.6%. In its most recent earnings update, the trust posted a net profit of HK$239.5 million, down 11.4% as compared to a year back.


The high yield should not fool investors because of late, the trust’s distributions have been falling. For the last twelve months, total distribution has dropped to 19.62 Hong Kong cents from 26.10 cents in the prior period.


Hutchison Port Holdings Trustis estimated to announce its 2018 fourth-quarter earnings on 4 February.


Blue-chip #2


Taking the second spot with a distribution yield of 5.8% isAscendas Real Estate Investment Trust(SGX: A17U). The real estate investment trust’s sponsor, Ascendas-Singbridge, was in the news earlier this week when CapitaLand Limited (SGX: C31) announced that it is looking to acquire Ascendas-Singbridge fully.


Distribution per unit (DPU) for Ascendas REIT’s latest second quarter fell 4.2% year-on-year to 3.887 Singapore cents. During the quarter, the REIT expanded into the UK. It said that other than Singapore, its long-term strategy is to build up its portfolio in Australia, the UK and Europe.


Ascendas REIT will be announcing its financial results for the third quarter ended 31 December 2018 on 30 January 2019. Investors would be hoping there are improvements in the DPU after a weak second quarter.


Blue-chip #3


Singapore Telecommunications Limited(SGX: Z74)is third on the list with a dividend yield of 5.7%.


For the fiscal year ended 31 March 2018, the telco paid a total dividend of20.5 cents per share, which includes a special dividend of 3.0 cents per share. Going forward, Singtel revealed that it expects to “maintain its ordinary dividends of 17.5 cents per share for the next two financial years and thereafter, will revert to the payout of between 60% and 75% of underlying net profit”.


The telco is estimated to reveal its third-quarter earnings on 8 February.


Blue-chip #4


With a dividend yield of 5.2%, global electronics services provider, Venture Corporation Ltd (SGX: V03), takes the fourth spot.


For its 2018 third-quarter, Venture’s revenue tumbled 27.4% to S$770.4 million while net profit fell 27.5% to S$80.8 million. The lower revenue was largely due to the impact arising from customers’ planned transition to new replacement products and merger and acquisition activities from some customers.


Will Venture improve its fourth-quarter earnings and subsequently increase its final dividend for 2018 from 60 cents per share dished out in 2017? Investors would know for sure when the company announces its earnings towards the end of February (estimated earnings release date is 27 February).


Blue-chip #5


Slotting into the fifth spot isCapitaLand Mall Trust(SGX: C38U) with a distribution yield of 4.9%. The retail REIT’s DPU for the 2018 third-quarter climbed 5.0% year-on-year to 2.92 Singapore cents. The increase came on the back of its gross revenue going up by 0.7% and its net property income increasing by 1.1%.


The REIT is pencilled in to announce its 2018 fourth-quarter earnings next week.


The Foolish takeaway


We should never invest based on high dividend yields alone. The dividend yield tells us nothing about the sustainability of a company’s dividend. As Foolish investors, we have to look for companies that cangrow, or at least sustain, their dividends year-after-year. The list above can serve as a great starting point for your further research though.


$Ascendas Reit(A17U.SI) $CapitaLand(C31.SI) $CapitaMall Trust(C38U.SI) $HPH Trust USD(NS8U.SI) $Venture(V03.SI) $SingTel(Z74.SI)

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