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Looking For Value In The Telecoms Industry

telecommunication tower telcoThere are no fewer than five telecom companies listed on the Singapore Stock Exchange.

The biggest players are SingTel (SGX: Z74), StarHub (SGX: CC3) and M1 (SGX: B2F). Less well known are Pacific Century Regional Developments (SGX: P15) and LanTroVision (SGX: Q7W).

Apart from Pacific Century which doesn’t pay a dividend, the rest sport yields that are significantly above the market average. This could make them attractive to both income investors and value investors, alike.

However the high earnings multiples of the Big Three, namely, SingTel, StarHub and M1 could send value investors scarpering. Similarly, little attraction can be found in the price to book values of these three companies, especially StarHub, which is valued at 40 times its book value. That is bordering on astronomic.

LanTroVision, with a price around its book value, and Pacific Century, which is currently valued at just under its book value, could be more interesting for value hunters.

Both companies also provide the added appeal of holding net cash on their balance sheets rather than net debt. LanTroVision, whose share price has almost doubled since the turn of the year may have seen better days in terms of a value investment.

However the same might not be true of Pacific Century. The company doesn’t just have its fingers in the telecommunications pie but it also has interests in information technology, financial services and property development. Its operation stretches from Singapore to India and from China and Hong Kong.

If you’re looking for a pure-play telecommunications company then you may wish to look elsewhere. But if you aren’t too bothered about what a company actually does, then Pacific Century might be worth a closer inspection.

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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 Adam Kuo doesn’t own shares in any companies mentioned.