How Cheap Is The Singapore Stock Market Currently?
- Original Post from The Motley Fool Sg

The Singapore stock market benchmark, the Straits Times Index (SGX: ^STI), has tumbled 1.3% so far for the month. With such weakness surrounding the local stock market, investors might be thinking: “How cheap is the Singapore stock market right now?”


Knowing whether the stock market is cheap or expensive could help us make better investment decisions.


There are two methods to determine if Singapore shares are cheap right now. The first way is to compare the market’s current price-to-earnings (PE) ratio to the market’s long-term average PE ratio. The second approach involves looking at the number of net-net stocks in the stock market.


PE valuation method


Since it is difficult to get the past daily PE ratios of the STI, the PE ratios of SPDR STI ETF (SGX: ES3) can be used as a proxy. The SPDR STI ETF is an exchange-traded fund (ETF) that tracks the fundamentals of the STI.


As of 14 December 2018, the SPDR STI ETF had a PE ratio of 11.0. Here are some of the other important PE ratios that we need:


1) The long-term average PE ratio: The STI’s average PE ratio from 1973 to 2010 was 16.9;


2) An instance of a high PE ratio for the STI: Back in 1973, the index’s PE ratio hit 35; and


3) An example of a low PE ratio for the STI: At the start of 2009, the index was valued at 6 times trailing earnings.


Based on the data above, we can see that Singapore stocks are cheaper than average right now.


Net-net stocks method


In this method, we will look at the number of net-net stocks available in the local stock market. To know what a net-net stock is, you can head to the explanation here. If there is a large number of net-net stocks than usual in the stock market, it could mean that stocks are cheap at that moment.


The following is a chart that shows the net-net stock count in Singapore since 2005:Source: S&P Global Market Intelligence


When the Straits Times Index is at a peak (such as in the second half of 2007), the net-net stock count is low. The reverse is also true: When the Straits Times Index is at a low (like in the first half of 2009), the net-net stock count is high. In the second half of 2007, the net-net stock count was below 50 while in the first half of 2009, the figure was at the peak of almost 200.


As of 14 December 2018, there were 112 net-net stocks. This is the highest level since the first quarter of 2017 but is still far from the net-net stock count seen in 2016.


The Foolish takeaway


Based on the two different valuation methods, we can safely say that stocks in Singapore are not that expensive, but they not in extreme bargain territory either.


$STI(^STI.IN) $STI ETF(ES3.SI)

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1 comment
traderben

Hi, what is netnet stock count? Where do we get the info? Thanks


Recommended & Related Posts

Are Singapore Shares Cheap or Expensive Right Now?
- Original Post from The Motley Fool Sg

Since the start of January 2019, the Straits Times Index (SGX: ^STI) has increased by 4.7%. With the recent stock market rally, investors might be wondering if Singapore shares are still as attractively priced as before.


There are two methods to determine if Singapore shares are cheap or expensive right now.


The first method is to compare the market’s current price-to-earnings (PE) ratio to the market’s long-term average PE ratio. The second approach involves looking at the number of net-net stocks in the stock market.


PE valuation method


Since it is difficult to get the past daily PE ratios of the Straits Times Index, the PE ratios of SPDR STI ETF (SGX: ES3) can be used as a proxy. The SPDR STI ETF is an exchange-traded fund (ETF) that tracks the fundamentals of the Straits Times Index.


As of 15 January 2019, the SPDR STI ETF had a PE ratio of 11.6. Here are some of the other important PE ratios that we need:


1) The long-term average PE ratio: The STI’s average PE ratio from 1973 to 2010 was 16.9;


2) An instance of a high PE ratio for the STI: Back in 1973, the index’s PE ratio hit 35; and


3) An example of a low PE ratio for the STI: At the start of 2009, the index was valued at 6 times trailing earnings.


Based on the data above, we can see that Singapore stocks are cheaper than average currently.


Net-net stocks method


In this method, we will look at the number of net-net stocks available in the local stock market. To know what a net-net stock is, you can head to the explanation here. If there is a large number of net-net stocks than usual in the stock market, it could mean that stocks are cheap at that moment.


The following is a chart that shows the net-net stock count in Singapore since 2005:



Source: S&P Global Market Intelligence


When the Straits Times Index is at a peak (such as in the second half of 2007), the net-net stock count is low. The reverse is also true: When the Straits Times Index is at a low (like in the first half of 2009), the net-net stock count is high. In the second half of 2007, the net-net stock count was below 50 while in the first half of 2009, the figure was at the peak of almost 200.


As of 15 January 2019, there were 112 net-net stocks. This is comfortably between the net-net stock count’s peak-and-trough from 2005 till today.


The Foolish takeaway


Based on the two different valuation methods, we can safely say that stocks in Singapore are not that expensive, but they not in extreme bargain territory either.


$STI(^STI.IN) $STI ETF(ES3.SI)

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Are Singapore Shares Cheap or Expensive Right Now?
- Original Post from The Motley Fool Sg

Since the start of January 2019, the Straits Times Index (SGX: ^STI) has increased by 4.7%. With the recent stock market rally, investors might be wondering if Singapore shares are still as attractively priced as before.


There are two methods to determine if Singapore shares are cheap or expensive right now.


The first method is to compare the market’s current price-to-earnings (PE) ratio to the market’s long-term average PE ratio. The second approach involves looking at the number of net-net stocks in the stock market.


PE valuation method


Since it is difficult to get the past daily PE ratios of the Straits Times Index, the PE ratios of SPDR STI ETF (SGX: ES3) can be used as a proxy. The SPDR STI ETF is an exchange-traded fund (ETF) that tracks the fundamentals of the Straits Times Index.


As of 15 January 2019, the SPDR STI ETF had a PE ratio of 11.6. Here are some of the other important PE ratios that we need:


1) The long-term average PE ratio: The STI’s average PE ratio from 1973 to 2010 was 16.9;


2) An instance of a high PE ratio for the STI: Back in 1973, the index’s PE ratio hit 35; and


3) An example of a low PE ratio for the STI: At the start of 2009, the index was valued at 6 times trailing earnings.


Based on the data above, we can see that Singapore stocks are cheaper than average currently.


Net-net stocks method


In this method, we will look at the number of net-net stocks available in the local stock market. To know what a net-net stock is, you can head to the explanation here. If there is a large number of net-net stocks than usual in the stock market, it could mean that stocks are cheap at that moment.


The following is a chart that shows the net-net stock count in Singapore since 2005:



Source: S&P Global Market Intelligence


When the Straits Times Index is at a peak (such as in the second half of 2007), the net-net stock count is low. The reverse is also true: When the Straits Times Index is at a low (like in the first half of 2009), the net-net stock count is high. In the second half of 2007, the net-net stock count was below 50 while in the first half of 2009, the figure was at the peak of almost 200.


As of 15 January 2019, there were 112 net-net stocks. This is comfortably between the net-net stock count’s peak-and-trough from 2005 till today.


The Foolish takeaway


Based on the two different valuation methods, we can safely say that stocks in Singapore are not that expensive, but they not in extreme bargain territory either.


$STI(^STI.IN) $STI ETF(ES3.SI)

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Is Jardine Cycle & Carriage Ltd A Bargain Now?
- Original Post from The Motley Fool Sg

Jardine Cycle & Carriage Ltd (SGX: C07), which is part of the Jardine Group of companies, has a diverse business portfolio. They include a strategic interest in Indonesia’s Astra International (IDX: ASII), a strong automotive presence through its Direct Motor Interests and other interests in the refrigeration, cement and milk business.


In Singapore, Jardine C&C is best known as the retailer of Mercedes Benz, Mitsubishi, Kia, Citroen, DS, and Maxus motor vehicles. The company has a market capitalisation of S$14.55 billion currently.


Between 1 Jan to 31 Dec 2018, Jardine C&C’s total return, which includes reinvested dividends, has trailed the Straits Times Index (SGX: ^STI). The former retreated 10%, while the latter dropped of 6.5%.


With the 10%share-price decline recorded by Jardine C&C in 2018, is the company a bargain at current prices?


The price-to-earnings (P/E) ratio, the price-to-book (P/B) ratio, the dividend yield and net debt to equity ratio might provide some useful pointers.


The conglomerate has recorded a trailing twelve months (TTM) earnings per share of US$1.47, which converts to S$1.99 (US$1 = S$1.35). Withits current share price at S$36.81, this implies a P/E ratio of 18.5.


The one-year historical P/E for Jardine C&C, however, stands at 13.3. In other words, it means that Jardine C&C is more expensive now compared to the previous year. But Jardine C&C did record a write-down on its non-trading items in the second quarter of 2018that led to a sharp drop in profits during the quarter. Hence, the drop in TTM earnings.


At the end of the third quarter of 2018, Jardine C&C reported Net Asset Value per share of US$15.07 (S$20.39), which results in a P/B ratio of 1.81 at current prices.


As the automotive distributor is more of a services company, it is not unusual for the P/B to be greater than one. For services companies, it could be better to compare the prevailing P/B with its historical average or an industry average for some context.


At end September 2018, Jardine C&C had a net debt position of US$4.36 billion, while total equity stood at US$12.88 billion. This results in a net debt to equity ratio of 34%.


Over the last three years (2015-2017), Jardine C&C’s net debt to equity ratio has been between 24% to 31%. This means the automotive distributor’s balance sheets has weakened slightly over the past year.


Lastly,Jardine C&C’s dividend hasrisen over the last three years, moving from S$0.95 in 2015 to S$1.18 in 2017. Assuming the company pays out a dividend at the same rate as 2017, thenthis wouldimply a yield of 3.2% at current prices.


Looking at the four metrics, Jardine C&C’s poor performance might be due to its one-off losses and a weakening balance sheet. The rising dividend over the past three years, however, might suggest amore confident outlook by mangement.


It seemss thoughmore investigationwillbeneeded to determine if Jardine C&C is a bargain at current prices.


$STI(^STI.IN) $Jardine C&C(C07.SI)

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Is Singapore Airlines Ltd A Bargain Now?
- Original Post from The Motley Fool Sg

Singapore Airlines Ltd (SGX: C6L) is Singapore’s national carrier. It is famous around the world for its ‘Singapore Girl’ branding.


Other than the namesake carrier which the airline runs, it also has other subsidiaries such as SilkAir, Scoot, and Vistara that serve different groups of customers in the area of passenger transportation.


Between 1 Jan and 31 Dec 2018, Singapore Airline’s total return, which includes reinvested dividends has underperformed the Straits Times Index (SGX: ^STI). Its shares fell 8.2% compared to the STI’s drop of 6.5%.


Has Singapore Airline’s share disappointing share-price performance in 2018 made it a bargain now?


Four metrics, namely, the price-to-earnings (P/E) ratio, the price-to-book (P/B) ratio, the dividend yield and net debt-to-equity ratio might provide the answer.


The airline recorded a trailing twelve months (TTM) earnings per share of S$ 0.39. With its current share price at S$9.71, the P/E ratio is 29. Over the past four years (FY2014-FY2017, Singapore Airlines fiscal year ends in March), its P/E ratio has ranged from 14.36 to 38.06, which means that its current P/E, is comfortably in the range.


At the end of the September quarter of 2018, Singapore Airline’s reported a Net Asset Value of S$11.87. This results in a P/B ratio of 0.82 at current prices. Its P/B ratio over the past four years has ranged from 1.12 to 0.9, indicating that on a P/B basis the company is attractively valued.


For the quarter ending September 2018, Singapore Airline had a net debt of S$2.3 billion, while total equity stood at S$14.4billion. Dividing the net debt figure by the total equity thus gives us a ratio of 0.16, implying that Singapore Airline’s debt is 16% of its total equity.


Lastly, the airline’s dividend has increase slightly over the last four years, moving from S$0.22 in FY2014 to S$0.40 in FY2017. Assuming the company pays out the same dividend as 2017, the yield would be 4.1% at current prices.


Looking at the four metrics, it appears that Singapore Airlines is attractively prices based on all four metrics. But the analysis presented above should only serve as a starting point for further investigation.


$STI(^STI.IN) $SIA(C6L.SI)

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1 Blue-Chip Share to Buy If You Are New to Investing
- Original Post from The Motley Fool Sg

If your resolution for 2019 is to start investing, I must say you have made the right decision.


You see, investing is not only for the select few. Everyone should invest to at least beat inflation, which averages 2.6% per year in Singapore.


Investing doesn’t mean leaving our money in the bank. Banks give us measly returns of around 0.05%. Therefore, money left in the bank is getting eroded by the inflation monster.


In an earlier article here, I had outlined three easy steps for new investors to navigate the stock market in 2019. The last step was to buy the right stock, where I recommended starting off by buying an exchange-traded fund (ETF).


However, if the new investor wants to go one step further, he or she can consider buying Singapore Exchange Limited (SGX: S68), a blue-chip share. Blue-chips are part of the Straits Times Index (SGX: ^STI), Singapore’s stock market benchmark, and are generally considered safe companies.


Why Singapore Exchange?


Singapore Exchange (SGX) is the only stock market operator in Singapore, and it provides listing, trading, clearing, settlement, depository and data services. If you want to buy any stock in Singapore, you have to go through SGX.


It would be near-impossible for anyone to try to penetrate SGX’s stronghold, in my opinion. This characteristic gives the company a wide economic moat.


Due to its position, SGX has an enviable net profit margin and return on equity (ROE). For itsfinancial year ended 30 June 2018, it clocked in a net profit margin of 42.4% and an ROE of 34.1%. Both the figures are higher than what most companies in Singapore’s stock market can achieve.


Show me the money


Historically, SGX has shown a stable track record of growth.


From FY2014 (financial year ended 30 June 2014) to FY2018, the company’s revenue grew 5.4% per annum, from S$686 million to S$845 million. Meanwhile, its net profit attributable to shareholders rose from S$320 million to S$363 million during the same period, increasing by 3.2% per year.


Together with the higher profitability, SGX’s dividend has climbed from S$0.28 per share in FY2014 to S$0.30 per share in FY2018, which translates to an annual growth rate of 1.7%.


The company also possesses a rock-solid balance sheet. As of its latest financial quarter, which ended on 30 September 2018, it had S$840 million in cash hoard with no debt.


Looking ahead


SGX has plenty of ways to grow in the years ahead. In its FY2018 results announcement, it mentioned:


“Cementing our position as a multi-asset exchange remains key to our strategy, together with growing our international presence and widening our partnerships and networks. The introduction of new equities products and services, enhancement of SGX Bond Pro, expansion of our steel value chain and development of new data business capabilities, will all play a part towards fulfilling this strategy in FY2019.


We also see an opportunity to develop a digital marketplace in the global freight industry, building on the strengths of Baltic Exchange and our commodity franchise.”


The Foolish takeaway


SGX may not be the company that grows at astronomical rates, but it offers a stable business with growing dividends. This characteristic makes SGX a great starter stock. The company also pays a dividend every three months, which is similar to what most real estate investment trust (REITs) do. At Singapore Exchange’s current share price of S$7.31, it has a dividend yield of around 4% and a price-to-earnings ratio of 21.


$STI(^STI.IN) $SGX(S68.SI)

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