Where Is The Value In Singapore’s General Retailers?

shoppingThere are around 80 consumer services companies listed on the Singapore Stock Exchange. That’s an awful lot of shopkeepers.

Thanks to the Industry Classification Benchmark (ICB) we can break down the retailers into smaller and more manageable subsets. For example, ‘broadline retailers’ refer to retail outlets and wholesalers that offer a wide variety of both hard and soft goods. Here in Singapore we have 7 such companies.

In an industry where the average PE is close to 55, you might think that Isetan (SGX: I15) with a PE of 49 could represent value. However, dig a little deeper and you could find some real gems.

The electronics and furniture retailer Courts Asia (SGX: RE2) has a considerably lower PE of 11. Its price around its book value could even tempt value investors to take a second look.

However closer inspection reveals that the company carries a large dollop of debt. Whilst profits more than cover the annual interest repayments, debts of around two thirds of shareholder equity, could be a deterrent. After all, value investors view debt as an unnecessary risk.

The largest of the seven broadline retailers, Metro Holdings Limited (SGX: M01), looks interesting. Despite trading near its 52-week high, Metro Holdings is only valued at about eight times earnings. It is also valued at seven tenths of its book value.

Metro is able to boast a dividend yield of nearly 6% alongside a healthy balance sheet. Based primarily in China, Indonesia and Singapore, Metro operates a chain of department stores that sell a wide range of merchandise, fashion accessories and women’s wear. In Singapore, Metro has also moved into specialty retailing where it manages the popular UK high street brands Monsoon and Accessorize.

In addition to its retail business Metro Holdings is involved in regional property development and recently announced the acquisition of stakes in two plots of land in the UK.

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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.