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Value In Singapore’s Utilities

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Among the 14 utilities companies listed on the Singapore Stock Exchange, value appears to be a rare as available taxis on a rainy day.

For instance, United Envirotech (SGX: U19) utilises clever technologies for treating water. However is likely to send value investors running for cover given its lofty Price-to-Earnings (PE) ratio of 46 and a meagre yield of just 0.2%.

The largest of the utilities companies, Sembcorp Industries (SGX: U96), is a market leader in the provision of energy and water. With around 10,000 employees, the company boasts both growing top-line sales and bottom line profits.

Its PE of 12 and dividend yield of around 3% are good. Its price to book of around two is also not too outrageous. However, this is probably not quite good enough for hard-core value investors. Whilst some might consider Sembcorp a good investment it doesn’t quite tick all the boxes that a value investor would want.

Holding more promise could be Ley Choon Group (SGX: Q0X). It is one of the largest underground utilities infrastructure companies. Its focus is constructing and maintaining sewers. It also produces asphalt pre-mix, which is used in building roads. There does not appear to be shortage of work for Ley Choon, given the seemingly endless construction works going on in Singapore.

In terms of the numbers, Ley Choon has an earnings multiple of eight, which is below the market average of 13. Its dividend yield is around 3%. What’s more, it is currently trading at around its book value.

The fly in Ley Choon’s ointment is, however, debt. It has net debts of S$122m, which is not insignificant for a company that has a market value of S$100m.

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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 AdamKuo doesn’t own shares in any companies mentioned.