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Singapore’s Cheapest and Most Expensive Blue Chips

Chips

Singapore’s stock market barometer, the Straits Times Index (SGX: ^STI), is currently selling for around 12.5 times its trailing earnings as of Thursday’s close at 3,186 points.

So while that does seem to be ostensibly cheap, that does not mean that every single one of its constituents is in the same situation as well.

As many of us might know, the STI is made up of 30 of the largest publicly-listed companies in Singapore, and they include telco giant SingTel, South-East Asia’s largest bank DBS Group Holdings, and Hong Kong conglomerate Jardine Matheson Holdings, among others.

All 30 blue chips, based on their trailing price to earnings (PE) ratio, are on various ends of the valuation spectrum. Here are some of Singapore’s cheapest as well as most expensive blue chips:

Cheap Shares

Price on 28/11/2013 Trailing PE ratio

Hongkong Land Holdings (SGX: H78)

US$5.88

9.7

Olam International
(SGX: O32)

S$1.555

10.2

Expensive Shares

Price on 28/11/2013

Trailing PE ratio

Genting Singapore
(SGX: G13)

S$1.485

25.8

Noble Group (SGX: N21) S$1.11

26.9

Source: S&P Capital IQ

Property developer and owner Hongkong Land Holdings is the cheapest large-cap share we have around here at the moment when looking at PE ratios. In its interim management statement covering the period for 1 July to 5 Nov 2013, it reported “relatively low” activity in the Hong Kong office leasing market despite “largely positive” rental reversions in its Central office portfolio.

Up next, we have commodities trader Olam as Singapore’s next cheapest blue chip. Back in April this year, Olam came up with a revamped business strategy that emphasised four priorities where it will accelerate free cash flow generation; reduce gearing; reduce complexity; and facilitate better understanding of Olam’s businesses.

The company’s latest first quarter results showed how it has progressed along those fronts: there was “significant improvement” in free cash flow to firm during the quarter; gearing was kept at 1.93, below a current self-imposed ceiling of 2; four business platforms and 27 profit centres underwent restructuring; and finally, “several measures” had been taken to enhance stakeholder communication.

Getting Singapore is currently number two on Singapore’s ‘Most Expensive Blue Chip’ list. The casino and resort operator has had a rather flat first nine months of the year as revenue dipped ever so slightly by 1% year-on-year to S$2.15b while profits were up 4% to S$538m.

The company also reported that its revenue base from the non-gaming (i.e. businesses not including its casino operations) segments in Resorts World Sentosa had grown. Meanwhile, the gaming business suffered a little due to lower win percentages.

Finally, we come to Noble, which is the most highly-valued STI constituent at the moment with a PE of 26.9. The company has its fingers in a number of pies, which involves the supply chain management of agricultural, industrial, and energy products.

For the nine months ended 30 Sep 2013, Noble’s revenue had managed to grow by 5% year-on-year to US$73.b. But, profits had been dinged by 67% to US$127m as an Australian subsidiary, Yancoal, suffered A$749m in losses for the first six months of the year.

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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 Chong Ser Jing doesn’t own shares in any companies mentioned.