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


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SATS Ltd (SGX: S58) is a company with two business segments: Food Solutions and Gateway Services. The Food Solutions segment covers airline catering, food distribution, and industrial catering whereas the Gateway Solutions segment is involved in ground handling services of passengers, flights, and cargo.


In a previous article, I highlighted a number of reasons why SATS might be a good share for dividend investors to own for the long term. As a quick recap, those reasons were:



  1. SATS has a solid financial track record

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But, all companies come with risk and there is one risk with SATS that investors should take into account as well before deciding whether they should be investing in the company right now.


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On one hand, it is clear that SATS exhibits some positive traits (its good track record of growth, history of growing its dividend, and strong balance sheet). On the other hand, investors need to consider whether these traits will be sustainable in the long run; it’s a crucial consideration given the company’s high valuation right now.


Conclusion


There are many things to like about SATS as a dividend stock for the long-term. But, investors need to consider whether its current high valuation (as compared to the market average) is justifiable.


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- Original Post from The Motley Fool Sg

SATS Ltd (SGX: S58) is a company with two business segments: Food Solutions and Gateway Services. The Food Solutions segment covers airline catering, food distribution, and industrial catering whereas the Gateway Solutions segment is involved in ground handling services of passengers, flights, and cargo.


In a previous article, I highlighted a number of reasons why SATS might be a good share for dividend investors to own for the long term. As a quick recap, those reasons were:



  1. SATS has a solid financial track record

  2. It has a growing dividend

  3. The balance sheet is strong


But, all companies come with risk and there is one risk with SATS that investors should take into account as well before deciding whether they should be investing in the company right now.


The risk: A high valuation


As investors, we should always invest in a share at a price that’s less than its value. This applies not only to value investors, but also to dividend investors.In simple terms, that means we should be paying less than a dollar for each dollar of assets.


One way to gauge SATS’s valuation is to compare its price-to-earnings (PE) and price-to-book (PB) ratios with those of the market. I will be using the SPDR STI ETF (SGX: ES3) as a proxy for the market; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s stock market barometer, theStraits Times Index (SGX: ^STI).


SATS’s share price is at S$4.77 currently, which gives the company PE and PB ratios of 20.5 and 3.3, respectively. These are significantly higher than the SPDR STI ETF’s selfsame ratios of 11.5 and 1.1.


On one hand, it is clear that SATS exhibits some positive traits (its good track record of growth, history of growing its dividend, and strong balance sheet). On the other hand, investors need to consider whether these traits will be sustainable in the long run; it’s a crucial consideration given the company’s high valuation right now.


Conclusion


There are many things to like about SATS as a dividend stock for the long-term. But, investors need to consider whether its current high valuation (as compared to the market average) is justifiable.


Click here nowfor yourFREEsubscription toTake StockSingapore, The Motley Fool’s free investing newsletter. Written byDavid Kuo,Take Stock Singaporetells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.


TheMotley Fool’s purpose is to help the world invest, better.Like us on Facebook to keep up-to-date with our latest news and articles.


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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. The Motley Fool Singapore has a recommendation for SATS Ltd.


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- Original Post from The Motley Fool Sg

SATS Ltd (SGX: S58) is a company with two business segments: Food Solutions and Gateway Services. The Food Solutions segment covers airline catering, food distribution, and industrial catering whereas the Gateway Solutions segment is involved in ground handling services of passengers, flights, and cargo.


In a previous article, I highlighted a number of reasons why SATS might be a good share for dividend investors to own for the long term. As a quick recap, those reasons were:



  1. SATS has a solid financial track record

  2. It has a growing dividend

  3. The balance sheet is strong


But, all companies come with risk and there is one risk with SATS that investors should take into account as well before deciding whether they should be investing in the company right now.


The risk: A high valuation


As investors, we should always invest in a share at a price that’s less than its value. This applies not only to value investors, but also to dividend investors.In simple terms, that means we should be paying less than a dollar for each dollar of assets.


One way to gauge SATS’s valuation is to compare its price-to-earnings (PE) and price-to-book (PB) ratios with those of the market. I will be using the SPDR STI ETF (SGX: ES3) as a proxy for the market; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s stock market barometer, theStraits Times Index (SGX: ^STI).


SATS’s share price is at S$4.77 currently, which gives the company PE and PB ratios of 20.5 and 3.3, respectively. These are significantly higher than the SPDR STI ETF’s selfsame ratios of 11.5 and 1.1.


On one hand, it is clear that SATS exhibits some positive traits (its good track record of growth, history of growing its dividend, and strong balance sheet). On the other hand, investors need to consider whether these traits will be sustainable in the long run; it’s a crucial consideration given the company’s high valuation right now.


Conclusion


There are many things to like about SATS as a dividend stock for the long-term. But, investors need to consider whether its current high valuation (as compared to the market average) is justifiable.


$STI(^STI.IN) $STI ETF(ES3.SI) $SATS(S58.SI)

Read more
1 Risk That Dividend Investors Should Know Before Investing In SATS Ltd Now
- Original Post from The Motley Fool Sg

SATS Ltd (SGX: S58) is a company with two business segments: Food Solutions and Gateway Services. The Food Solutions segment covers airline catering, food distribution, and industrial catering whereas the Gateway Solutions segment is involved in ground handling services of passengers, flights, and cargo.


In a previous article, I highlighted a number of reasons why SATS might be a good share for dividend investors to own for the long term. As a quick recap, those reasons were:



  1. SATS has a solid financial track record

  2. It has a growing dividend

  3. The balance sheet is strong


But, all companies come with risk and there is one risk with SATS that investors should take into account as well before deciding whether they should be investing in the company right now.


The risk: A high valuation


As investors, we should always invest in a share at a price that’s less than its value. This applies not only to value investors, but also to dividend investors.In simple terms, that means we should be paying less than a dollar for each dollar of assets.


One way to gauge SATS’s valuation is to compare its price-to-earnings (PE) and price-to-book (PB) ratios with those of the market. I will be using the SPDR STI ETF (SGX: ES3) as a proxy for the market; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s stock market barometer, theStraits Times Index (SGX: ^STI).


SATS’s share price is at S$4.77 currently, which gives the company PE and PB ratios of 20.5 and 3.3, respectively. These are significantly higher than the SPDR STI ETF’s selfsame ratios of 11.5 and 1.1.


On one hand, it is clear that SATS exhibits some positive traits (its good track record of growth, history of growing its dividend, and strong balance sheet). On the other hand, investors need to consider whether these traits will be sustainable in the long run; it’s a crucial consideration given the company’s high valuation right now.


Conclusion


There are many things to like about SATS as a dividend stock for the long-term. But, investors need to consider whether its current high valuation (as compared to the market average) is justifiable.


Click here nowfor yourFREEsubscription toTake StockSingapore, The Motley Fool’s free investing newsletter. Written byDavid Kuo,Take Stock Singaporetells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.


TheMotley Fool’s purpose is to help the world invest, better.Like us on Facebook to keep up-to-date with our latest news and articles.


More reading



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. The Motley Fool Singapore has a recommendation for SATS Ltd.


$STI(^STI.IN) $STI ETF(ES3.SI) $SATS(S58.SI)

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