Is the Singapore Stock Market Cheap or Expensive Right Now?
- Original Post from The Motley Fool Sg

Knowing how cheap the stock market currently is, can help us to simplify our investing decision.
There are two methods to find out if Singapore stocks are a steal or are in an overheated territory 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 method is to determine the number of net-net stocks in the market.
With that, let’s check out if the local stock market is cheap or expensive.
The first method
The local stock market can be represented by the Straits Times Index (SGX: ^STI), or STI for short. It consists of the 30 biggest stocks in Singapore.
Since it is difficult to get the past daily PE ratios of the 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 replicates the performance of the STI.
As of 14 May 2018, 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 instance of a low PE ratio for the STI: At the start of 2009, the index was valued at 6 times its trailing earnings.
Based on the data above, it is realistic to say that stocks in Singapore are cheaper than average now.
The second method
In this method, we will look at the number of net-net stocks available in the local market.
A net-net stock is a stock with a market capitalisation that is lower than its net current asset value. The net current asset value can be calculated using the following formula:
Net current asset value = Total current assets – Total liabilities
In theory, a net-net stock is a steal as investors can get a discount on the company’s current assets, such as cash, after stripping off all liabilities. Moreover, the company’s fixed assets, such as properties, are thrown into the mix for free.
Logic holds that if a large number of net-net stocks than usual can be found in a stock market at a certain point in time, then stocks would likely to be 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
Two things are worth noting about the chart.
Firstly, the second-half of 2007 saw the net-net stock count fall to a low of below 50. This was when the STI reached a peak before the Great Financial Crisis struck.
Secondly, the first-half of 2009 was when the net-net stock count hit a high of nearly 200. It was during this time that the STI reached its bottom during the crisis.
We can observe an inverse relationship from the chart – when the STI is at a peak, the net-net stock count is low, and when the STI is at a low, the net-net stock count is high.
As of 14 May 2018, there were 92 net-net stocks. This is comfortably between the net-net stock count’s peak-and-trough from 2005 till today.
A Foolish takeaway
We’ve walked through two ways to find out the state of Singapore’s stock market right now, and they both point to a similar conclusion. That is, stocks here are not that expensive, but they not in a deep bargain region either.
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Yangzijiang Shipbuilding Holdings Ltd’s Shares Climbed More Than 8% Last Week: What’s Behind the Euphoria?
- Original Post from The Motley Fool Sg

Yangzijiang Shipbuilding Holdings Ltd (SGX: BS6) is one of the largest private shipbuilding companies in China. It makes a wide range of commercial vessels, including large containerships, bulk carriers, and liquefied natural gas (LNG) carriers, at its four shipyards in Jiangsu Province, China.
Last Friday (10 August), Yangzijiang’s shares closed at S$0.99 apiece, up 8.8% for the week. In comparison, during the same period, the Straits Times Index (SGX: ^STI) put on just 0.6%. What could be the reason behind the increase in Yangzijiang’s share price? The most probable cause is that the company reported a robust set of financial results for the second quarter of 2018.
Strong financial numbers
Revenue for the reporting quarter came in at RMB 8.0 billion, more than doubling from the top line of RMB 3.8 billion a year ago. The huge improvement was due to a higher number of construction and delivery of several large-size vessels for the quarter. In 2018’s second quarter, 20 vessels were delivered as compared to just four in the same quarter a year ago.
Several of the large-size vessels delivered during the second quarter of 2018 commanded higher margins as well, resulting in the gross profit margin for Yangzijiang’s core shipbuilding business to increase slightly from 20% a year ago to 21%.
Meanwhile, net profit for the reporting quarter rose 38% to RMB 994.9 million. The net profit margin fell to 12% from 19% a year ago.
On a half-year basis, Yangzijiang’s revenue grew 53% to RMB 12.9 billion while net profit improved by 15% to RMB 1.6 billion.
The following chart shows the gross profit, gross profit margin, net profit, and net profit margin for Yangzijiang from 2014 to the first half of 2018:
Source: Yangzijiang earnings presentation
Even though Yangzijiang’s net profit in the first half of 2018 was a vast improvement year-on-year, the company’s net profit margin is still way off the 2014 peak of 22.7%.
As of 30 June 2018, the shipbuilder had RMB 7.9 billion in cash and cash equivalents, and RMB 3.8 billion in total debt, giving a gross gearing of 13.7%. This is an improvement from the end of 2017 when it had RMB 6.2 million in cash and RMB 4.9 billion in total borrowings, translating to a gross gearing of 18.4%.
In the second quarter of 2018, operating cash flow surged from RMB 345.9 million to RMB 3.8 billion. With capital expenditure (including the acquisition of financial assets) falling from RMB 311.5 million to RMB 151.1 million, Yangzijiang’s free cash flow improved from RMB 34.4 million to RMB 3.7 billion.
Looking ahead
As of 7 August 2018, the shipbuilder had an outstanding order book of US$4.1 billion for 114 vessels, which the company expects to provide a stable revenue stream for the next 2.5 years at the minimum.
On its outlook, Yangzijiang commented:
“Supported by improving global seaborne trade volume and higher charter rates for several major vessel categories, the shipbuilding market continued to recover in 2018. Despite studies that suggest limited impact of the protectionism and trade wars on the global trade volume, the Group is mindful of the uncertainties and the potential risks to the shipping and shipbuilding demand. However, the Group’s existing order book has no exposure to the sectors on the US’ tariff list, and the Group doesn’t see the tariff list directly impacting its future order flow.
In the longer term, seaborne trade will remain a dominant part in international trade. The growth of e-commerce, China’s Belt and Road initiative, and International Maritime Organization rules and regulations on vessel emission standards are all expected to support the shipbuilding demand for high-tech, environmentally- friendly and energy-efficient vessels. In China, the supply-side reform will further propel the consolidation in the shipbuilding industry, and stronger shipyards, including Yangzijiang, will benefit. Overall, the Group remains cautiously optimistic on the outlook for the shipbuilding industry.”
The Foolish takeaway
Yangzijiang’s share price hit a 52-week intraday low of S$0.84 around a month ago. The price has since recovered slightly to end at S$0.99 last Friday. If the shipbuilding market continues to improve and Yangzijiang can ride on the better sentiment, its financial performance should strengthen further. Patient investors could then be rewarded in the longer term.
$STI(^STI.IN) $YZJ Shipbldg SGD(BS6.SI)

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The Singapore Stock Market Today: Synagie Corporation Ltd Makes Its Trading Debut
- Original Post from The Motley Fool Sg

Here are three things about the local stock market that you might be interested in today.
1. The Straits Times Index (SGX: ^STI) ended the day down 0.4%, or 13.3 points, to 3,326.7. Of the 30 index components, 11 were in the red; 14 were in the green while the remaining five finished unchanged.
The biggest loser among the blue-chip stocks was DBS Group Holdings Ltd (SGX: D05). The bank’s shares fell 2.9% to S$26.00 each.
Last week, DBS announced its second quarter of 2018 results. For the quarter, total income improved 10% year-on-year to S$3.2 billion while net profit (without one-off items) climbed 20% to S$1.4 billion. However, the bank’s chief executive warned that he expects the Singapore property loan growth to be affected by the latest cooling measures. To know more about the earnings and the bank’s outlook, you can head here.
The blue-chip that gained the most was Yangzijiang Shipbuilding Holdings Ltd (SGX: BS6), soaring some 9% to S$0.99.
Yesterday, the shipbuilder made public its financial results for the 2018 second-quarter. Quarterly revenue more than doubled to RMB 8.0 billion due to construction and delivery of several large-size vessels. In the latest quarter, 20 vessels were delivered as compared to four ships delivered in the same quarter last year. Meanwhile, the bottom-line grew 38% year-on-year to RMB 994.9 million.
2. Before the stock market opened this morning, Singapore Technologies Engineering Ltd (SGX: S63) announced its second quarter of 2018 earnings.
Revenue for the reporting quarter fell 3% to S$1.7 million, but net profit improved 10% to S$117.5 million. The fall in the top-line was due to an absence of a one-time revenue increase for its electronics sector in the second quarter last year from the modification of revenue recognition estimates.
At the end of June 2018, ST Engineering had an order book of S$13.4 billion, of which around S$2.7 billion is expected to be delivered for the rest of 2018.An interim dividend of 5.0 Singapore cents per share was declared, similar to the interim dividends paid out over the last three years.
President and chief executive of ST Engineering, Vincent Chong, commented on the latest results:
“Our Aerospace and Electronics sectors delivered strong 2Q2018 earnings. Our order book remained robust at $13.4b, contributed by new orders including those in the Smart City spaces. On the whole, we are tracking well on our strategy of strengthening our core as well as actively pursuing growth opportunities in defence exports and Smart City projects.”
ST Engineering was the fourth-best performer of the Straits Times Index today. Its shares rose 1.2% to S$3.45 apiece.
3. Synagie Corporation Ltd (SGX: V2Y) made its trading debut today by opening at S$0.265 per share, slightly lower than its initial public offering (IPO) price of S$0.27.
The company is Southeast Asia’s leading e-commerce enabler in the body, beauty and baby (BBB) sector, and is the fastest-growing e-commerce start-up in Singapore.
Synagie shares ended the day at S$0.275 each, up 1.9% from the listing price. To know more about the company’s IPO, you can headhere.
$STI(^STI.IN) $YZJ Shipbldg SGD(BS6.SI) $DBS(D05.SI) $ST Engineering(S63.SI)

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3 Cheap Stocks from the List of 30 Best Stocks in Singapore for 2018
- Original Post from The Motley Fool Sg

In January this year, my Foolish colleague, Chong Ser Jing, ranked all the stocks in the Singapore stock market according to theMagic Formula, an investing strategy made popular by investor Joel Greenblatt in his book,The Little Book That Beats The Market.Ser Jing wanted to find the30 best stocks in Singapore for 2018based on the formula.
To apply Greenblatt’s strategy, we should buy the 30 stocks from the list and hold them for a year. However, the value investors among us might be looking for the really cheap stocks out of the 30 companies to add to their portfolio.
As such, with the help of our data provider, S&P Global Market Intelligence, I screened for the stocks that are selling at a trailing price-to-earnings ratio that is lower than that of the SPDR STI ETF (SGX: ES3). The SPDR STI ETF can be taken as a proxy for Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI). As of 3 August 2018, the SPDR STI ETF had a price-to-earnings (PE) ratio of 11.6.
Of the 30 Magic Formula stocks in Ser Jing’s list, 21 companies were trading at a PE ratio of below 11 (as of 3 August 2018). Of those 21 stocks, I picked out three companies which looked the most interesting to me.
Company 1: United Global Ltd (SGX: 43P)
United Global is an independent lubricant manufacturer that serves mainly the automotive, industrial, and marine industries. It manufactures a wide range of lubricant products under its in-house brands such as United Oil, U Star Lube, Bell1 and Hydropure.
United Global’s revenue had fallen from US$102.1 million in 2013 to US$99.8 million in 2017. However, its net profit nearly tripled from US$3.3 million to US$9.2 million during the same time frame.
As of 31 March 2018 (the date of the latest company data available), United Global’s balance sheet carried US$10.4 million in cash and bank balances, and US$7.2 million in total borrowings. This gives United Global a net cash position of US$3.1 million.
United Global’s acquisition of its strategic partner in Indonesia – PT Pacific Lubritama Indonesia (PLI) – in July 2017 should also bode well for its future. I touched on this topic in an earlier article of mine.
At United Global’s last traded price of S$0.45, the company was selling at 10.8 times trailing earnings.
Company 2: China Sunsine Chemical Holdings Ltd (SGX: CH8)
China Sunsine Chemical is a leading speciality rubber chemicals producer. It also ranks as the world’s largest producer of rubber accelerators, and China’s largest producer of insoluble sulphur. The company serves more than 65% of the top 75 tire makers in the world, including brands such asBridgestone, Michelin, Goodyear, and Pirelli.
China Sunsine Chemical had grown its revenue by 12.7% per year from 2013 to 2017. But what’s more impressive is its annual net profit growth rate of 45.2% over the same period. This also means that the company’s net profit margin had improved from 4.5% in 2013 to 12.5% in 2017. To know more about the company’s financials, you can head here.
China Sunsine Chemical’s profit should show strong growth in 2018’s second quarter (2Q2018) compared to a year ago. At the end of July, the company announced a “positive profit alert” where it said:
“The expected profit growth is mainly due to the increase in both average selling price (“ASP”) and sales volume of the Group’s products. As disclosed in several of our prior results announcements, the Chinese government has been placing more emphasis on environmental protection, and more frequent environmental protection inspections were conducted. Some players in the rubber chemicals industry which failed to meet the relevant environmental regulations were forced to suspend their productions. This had resulted in the short supply in the market. As such, the Group was able to sell more products at a high ASP in 2Q2018.”
The balance sheet of China Sunsine Chemical, as of 31 March 2018, was clean with RMB 508.7 million in cash and bank balances, and zero debt. I will be keeping a lookout for the company’s earnings update when it is released today after market close.
On Monday, China Sunsine Chemical’s share price closed at S$1.44, giving the company a price-to-earnings ratio of 8.
Company 3: Tat Seng Packaging Group Ltd (SGX: T12)
Tat Seng designs and manufactures paper packaging products that are able to pack a diverse range of goods according to its customers’ specifications.
Just like China Sunsine, Tat Seng’s net profit has been growing at a faster rate than its revenue. In 2013, Tat Seng had revenue of S$215.6 million and net profit of S$11.8 million. These figures have grown to S$303.3 million and S$20.3 million, respectively, in 2017, translating into compound annual growth rates of 8.9% and 14.5%. It’s not a surprise to learn that Tat Seng’s net profit margin had improved over the same period, from 5.5% in 2013 to 6.7% in 2016.
Tat Seng could have pricing power for its China business. In 2017, Tat Seng Packaging’s China subsidiaries raised their selling prices, especially for sales of corrugated boards, and passed on higher raw material costs to their clients. Billionaire investor Warren Buffett likes companies that can raise prices without losing market share. He once said:
“The single-most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by a tenth of a cent, then you’ve got a terrible business. I’ve been in both, and I know the difference.”
At one look, Tat Seng looks like it is selling commodity-type products. However, its ability to raise prices and grow its China business’s revenue grow by 35.9% in 2017 has made me more interested in learning more about the company.
At its last traded price of S$0.75, Tat Seng was selling at 5.8 times trailing earnings.
$STI(^STI.IN) $China Sunsine(CH8.SI) $STI ETF(ES3.SI) $Tat Seng Pkg(T12.SI)

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3 Cheap Stocks from the List of 30 Best Stocks in Singapore for 2018
- Original Post from The Motley Fool Sg

In January this year, my Foolish colleague, Chong Ser Jing, ranked all the stocks in the Singapore stock market according to theMagic Formula, an investing strategy made popular by investor Joel Greenblatt in his book,The Little Book That Beats The Market.Ser Jing wanted to find the30 best stocks in Singapore for 2018based on the formula.
To apply Greenblatt’s strategy, we should buy the 30 stocks from the list and hold them for a year. However, the value investors among us might be looking for the really cheap stocks out of the 30 companies to add to their portfolio.
As such, with the help of our data provider, S&P Global Market Intelligence, I screened for the stocks that are selling at a trailing price-to-earnings ratio that is lower than that of the SPDR STI ETF (SGX: ES3). The SPDR STI ETF can be taken as a proxy for Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI). As of 3 August 2018, the SPDR STI ETF had a price-to-earnings (PE) ratio of 11.6.
Of the 30 Magic Formula stocks in Ser Jing’s list, 21 companies were trading at a PE ratio of below 11 (as of 3 August 2018). Of those 21 stocks, I picked out three companies which looked the most interesting to me.
Company 1: United Global Ltd (SGX: 43P)
United Global is an independent lubricant manufacturer that serves mainly the automotive, industrial, and marine industries. It manufactures a wide range of lubricant products under its in-house brands such as United Oil, U Star Lube, Bell1 and Hydropure.
United Global’s revenue had fallen from US$102.1 million in 2013 to US$99.8 million in 2017. However, its net profit nearly tripled from US$3.3 million to US$9.2 million during the same time frame.
As of 31 March 2018 (the date of the latest company data available), United Global’s balance sheet carried US$10.4 million in cash and bank balances, and US$7.2 million in total borrowings. This gives United Global a net cash position of US$3.1 million.
United Global’s acquisition of its strategic partner in Indonesia – PT Pacific Lubritama Indonesia (PLI) – in July 2017 should also bode well for its future. I touched on this topic in an earlier article of mine.
At United Global’s last traded price of S$0.45, the company was selling at 10.8 times trailing earnings.
Company 2: China Sunsine Chemical Holdings Ltd (SGX: CH8)
China Sunsine Chemical is a leading speciality rubber chemicals producer. It also ranks as the world’s largest producer of rubber accelerators, and China’s largest producer of insoluble sulphur. The company serves more than 65% of the top 75 tire makers in the world, including brands such asBridgestone, Michelin, Goodyear, and Pirelli.
China Sunsine Chemical had grown its revenue by 12.7% per year from 2013 to 2017. But what’s more impressive is its annual net profit growth rate of 45.2% over the same period. This also means that the company’s net profit margin had improved from 4.5% in 2013 to 12.5% in 2017. To know more about the company’s financials, you can head here.
China Sunsine Chemical’s profit should show strong growth in 2018’s second quarter (2Q2018) compared to a year ago. At the end of July, the company announced a “positive profit alert” where it said:
“The expected profit growth is mainly due to the increase in both average selling price (“ASP”) and sales volume of the Group’s products. As disclosed in several of our prior results announcements, the Chinese government has been placing more emphasis on environmental protection, and more frequent environmental protection inspections were conducted. Some players in the rubber chemicals industry which failed to meet the relevant environmental regulations were forced to suspend their productions. This had resulted in the short supply in the market. As such, the Group was able to sell more products at a high ASP in 2Q2018.”
The balance sheet of China Sunsine Chemical, as of 31 March 2018, was clean with RMB 508.7 million in cash and bank balances, and zero debt. I will be keeping a lookout for the company’s earnings update when it is released today after market close.
On Monday, China Sunsine Chemical’s share price closed at S$1.44, giving the company a price-to-earnings ratio of 8.
Company 3: Tat Seng Packaging Group Ltd (SGX: T12)
Tat Seng designs and manufactures paper packaging products that are able to pack a diverse range of goods according to its customers’ specifications.
Just like China Sunsine, Tat Seng’s net profit has been growing at a faster rate than its revenue. In 2013, Tat Seng had revenue of S$215.6 million and net profit of S$11.8 million. These figures have grown to S$303.3 million and S$20.3 million, respectively, in 2017, translating into compound annual growth rates of 8.9% and 14.5%. It’s not a surprise to learn that Tat Seng’s net profit margin had improved over the same period, from 5.5% in 2013 to 6.7% in 2016.
Tat Seng could have pricing power for its China business. In 2017, Tat Seng Packaging’s China subsidiaries raised their selling prices, especially for sales of corrugated boards, and passed on higher raw material costs to their clients. Billionaire investor Warren Buffett likes companies that can raise prices without losing market share. He once said:
“The single-most important decision in evaluating a business is pricing power. If you’ve got the power to raise prices without losing business to a competitor, you’ve got a very good business. And if you have to have a prayer session before raising the price by a tenth of a cent, then you’ve got a terrible business. I’ve been in both, and I know the difference.”
At one look, Tat Seng looks like it is selling commodity-type products. However, its ability to raise prices and grow its China business’s revenue grow by 35.9% in 2017 has made me more interested in learning more about the company.
At its last traded price of S$0.75, Tat Seng was selling at 5.8 times trailing earnings.
$STI(^STI.IN) $China Sunsine(CH8.SI) $STI ETF(ES3.SI) $Tat Seng Pkg(T12.SI)

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3 Companies That Have Repurchased Their Shares This Week
- Original Post from The Motley Fool Sg

Share buybacks can be beneficial for shareholders if done for the correct reasons. Here are three stocks picked at random that have repurchased their shares thus far during the week, as of market open today.
Stamford Land Corporation Ltd (SGX: H07)
Stamford Land is Australasia’s largest independent owner and operator of luxury hotels. It has a portfolio of prime hotels and investment properties in Australia and New Zealand.
On 1 August 2018, the company bought back 1,140,900 shares at S$0.48 per share. The cost came up to around S$548,500. The recent share buyback is the first for the company in recent history.
Stamford Land shares closed at S$0.495 apiece on Thursday.This translates to a price-to-book (PB) ratio of 0.8 and a dividend yield of 2%.
AEM Holdings Ltd (SGX: AWX)
AEM provides handling and test solutions for customers who produce microprocessors, high-speed communications, Internet of Things devices, and solar cells.
On 2 August, AEM bought back 100,000 shares at S$0.745 per share. It spent slightly less than S$75,000 for the share buyback. The repurchase comes hot on the heels of its shares plunging drastically after announcing the latest earnings results.
Shares in AEM closed at S$0.735 each on Thursday. The company is going at five times trailing earnings and has a dividend yield of 5.3%.
Sembcorp Marine Ltd (SGX: S51)
Sembcorp Marine is one of the world’s largest oil rig builder. It is part of the conglomerate, Sembcorp Industries Limited (SGX: U96), which is a Straits Times Index (SGX: ^STI) component. Sembcorp Industries has a 61% ownership in Sembcorp Marine.
On 2 August, Sembcorp Marine repurchased 100,000 shares at S$1.7765 apiece, translating to a cost of around S$177,900.
Shares in Sembcorp Marine ended Thursday at S$1.77 each. This gives a PB ratio of 1.6 and a dividend yield of 0.6%. It has no trailing earnings to speak of.
$STI(^STI.IN) $Stamford Land(H07.SI) $Sembcorp Marine(S51.SI) $Sembcorp Ind(U96.SI)

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