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.


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traderben

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


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Is Thai Bev A Bargain Now?
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Thai Beverage Public Company Limited (SGX: Y92), or Thai Bev for short, is Thailand’s largest and one of Southeast Asia’s biggest beverage companies, with distilleries in Thailand, Scotland, China, and Myanmar.


It is listed on the Singapore market and sports a market capitalisation of S$18.2 billion. It has four core segments – spirits, beer, non-alcoholic beverage, and food.


Between 1 Jan to 31 Dec 2018, Thai Bev’s total return, which includes reinvested dividends, has underperformed the Straits Timnes Index (SGX: ^STI). The former dropped a staggering 31.7% compared to the latter’s drop of 6.5%.


Has the lacklustre performance by Thai Bev’ made it a bargain at current prices?


To find out 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 F&B conglomerate’s fiscal year ended on September 2018, for FY18. It recorded earnings per share (EPS) of THB$ 0.74 which converts to S$0.03 (S$1 = THB$23.4). With Thai Bev’s current share price at S$0.72, this implies a P/E ratio of 24 at current prices.


Over the past four years (2015-2018), the F&B conglomerate’s EPS hasbeen beteweenTHB$ 1.37 to THB$0.74. So, Thai Bev’s latest EPS was the lowest in the past four years.


At the end of the of FY2018, Thai Bev reported a Net Asset Value of THB$4.82 (S$0.21). This results in a P/B ratio of 3.4 at current prices. Being a services company, it is not unusual to see a high P/B ratio for Thai Bev.


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


Singapore’s Top 5 Dividend Shares Among the World’s Best


Do you like income stocks?


In this article, I looked at the top five Singapore-listed companies that are part of the FTSE All-World High Dividend Yield Index sporting the highest dividend yields. The FTSE All-World High Dividend Yield Index contains 1,389 globally-listed shares that have a higher-than-average dividend yield. The index does not include real estate investment trusts (REITs) and stocks that are forecast to pay no dividend over the next 12 months.


Companies discussed in the article include Hutchison Port Holdings Trust (SGX: NS8U), StarHub Ltd (SGX: CC3), Singapore Telecommunications Limited (SGX: Z74), M1 Ltd (SGX: B2F) and Venture Corporation Ltd (SGX: V03).


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3 Singapore Blue Chips That Have More Than Doubled Their Profits In The Last Decade


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Maximise dividends on your REITs with our brand-new Complete Guide To Buying The Best Singapore REITs. We reveal everything we think you need to know about finding the best REITs that hands you a fat dividend cheque ...even if you have no REITs experience at all! Get instant access to your 100% FREE, actionable, 42-page PDF guide here.


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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.


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).


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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.


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.


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Over the last 12 months, Thai Beverage Public Company Limited‘s (SGX: Y92) share price has fallen by 21% to S$0.735 currently. The decline may cause some investors to be interested in buying shares of the company. If you happen to be in this group, I shared in a previous article three things you should know about Thai Beverage before you buy its shares. In this article, I want to discuss two more aspects about the company’s business.


Before I dive into it, here’s a quick description of Thai Beverage’s business for context later: The company operates predominantly in Thailand, and has four different business segments, namely, Spirits, Beer, Food, and Non-Alcoholic Beverages; it’s worth noting too that Thai Beverage changed its financial year end from 31 December to 30 September in 2016.


3 things to know


The three things I shared about Thai Beverage in my previous article mentioned earlier were its financial track record, its recent challenges, and its return on invested capital. I found that Thai Beverage has a patchy track record (its revenue had grown in recent years, but its profit had fallen); all its business segments, with the exception of Food, experienced weakness in the latest financial year; and it managed to generate a solid return on invested capital of 26.5% in its financial year ended 30 September 2018 (FY2018).


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In the case of Thai Beverage, it grew its dividend by 11.1% per year from THB 0.44 per share in 2013 to THB 0.67 per share in FY2017. But in FY2018, the company reduced its dividend to THB 0.39 per share because of a decline in profit. Clearly, the recent reduction in Thai Beverage’s dividend is undesirable. Going forward, Thai Beverage’s dividend will likely correlate to its profit (it has a policy to pay at least 50% its net profit as a dividend).


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At Thai Beverage’s share price of S$0.735 currently, the company has a price-to-book (PB) ratio, price-to-earnings (PE) ratio and dividend yield of 3.6, 23.6, and 2.3%, respectively. In comparison, the selfsame valuation numbers for the Singapore market are 1.1, 11.5, and 3.49%. I’m using theSPDR 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 benchmark, the Straits Times Index (SGX: ^STI).


It’s clear that Thai Beverage is valued at a premium to the market because of its higher PB and PE ratios, and inferior dividend yield.


A Foolish conclusion


It’s never easy when it comes to making an investment decision since we must look into many different areas of a company.In the case of Thai Beverage, it has a patchy track record of growth in its financials and dividend, and it has been facing some tough challenges in FY2018. Moreover, Thai Beverage’s shares currently have valuations that are more expensive than the market. The saving grace here is that the company managed to generate a solid ROIC of 26.5% in FY2018, which is commendable.


I hope the five things I’ve covered about Thai Beverage’s business fundamentals can help you make a more informed investing decision when it comes to its shares.


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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- Original Post from The Motley Fool Sg

There are 26 Singapore-listed shares in the FTSE All-World High Dividend Yield Index. This global dividend yield index contains 1,389 globally-listed shares that have a higher-than-average dividend yield. The index excludes real estate investment trusts (REITs) and stocks that are forecast to pay no dividend over the next 12 months.


Here, let’s look at the best five Singapore-listed companies – part of the FTSE All-World High Dividend Yield Index – that have the highest dividend yields (yield data as of 18 January 2019).


The best of the lot


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StarHub Ltd (SGX: CC3) comes in the second place with a dividend yield of 9%. Just like Hutchison Port, StarHub did not fare well on the dividend-sustainability front. The telco’s dividend has tumbled from 20 Singapore cents per share in 2016 to 16 cents in 2017.


For 2018, StarHub has guided for a total dividend of 16 cents. To know more about StarHub’s dividends, you can head here.


Slotting into the third place is StarHub’s peer, Singapore Telecommunications Limited(SGX: Z74). The largest telco in Singapore has 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, including a special dividend of 3.0 cents per share.


Going forward, Singtel said 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”.


Yet another telco, M1 Ltd (SGX: B2F) is among the world’s best dividend-yielding companies with a 5.5% dividend yield. However, its dividend payout has been coming down too. In 2017, M1 decreased its total dividend to 11.4 cents per share, down from 12.9 cents per share dished out in 2016.


For a comparison of Singtel’s and M1’s dividends, you can check out the article here.


Last but not the least, Venture Corporation Ltd (SGX: V03) takes the fifth spot with a dividend yield of 5.3%. In 2017, Venture increased its dividend payout by 20% from 50 cents per share to 60 cents per share.


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The Foolish takeaway


As can be seen above, companies with the best dividend yields may not necessarily make good investments. Before investing in any dividend shares, we should thoroughly research on whether their dividends are sustainable by looking at the dividend payout ratio, among other metrics. Only then can we make a holistic assessment of an income share.


Maximise dividends on your REITs with our brand-new Complete Guide To Buying The Best Singapore REITs. We reveal everything we think you need to know about finding the best REITs that hands you a fat dividend cheque ...even if you have no REITs experience at all! Get instant access to your 100% FREE, actionable, 42-page PDF guide here.


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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 Sudhan P doesn't own shares in any companies mentioned.


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