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Could Hongkong Land Holdings Be A Value STI Stock?

HklandlogoThe Straits Times Index (SGX: ^STI), Singapore’s benchmark stock market index, tracks the top 30 quoted companies by market capitalisation.

A cursory glance at the earnings multiples, dividend yields and price-to-book ratios of the 30 constituent companies appear to reveal little in the way of value in the Index. Could this be the stock market bubble that some people talk about, at length?

Interestingly, companies such as Golden Agri-Resources Limited (SGX: E5H) and Hongkong Land Holdings Limited (SGX: H78) trade below their book values. In both cases, they are valued at around a 40% discount. However, neither has a particularly attractive PE nor dividend yield. Golden Agri-Resources is valued at over 18 times earnings and yields 1.9%. Hongkong Land is valued at about 13 times earnings and yields 2.7%.

Meanwhile, Keppel Corporation Limited (SGX: BN4) and Olam International Limited (SGX: O32) trade at reasonable Price-to-Earnings of around 10. However, they are both valued at around twice their book values.

The Straits Times Index may be a good place to look for, say, income shares. These include Hutchinson Port Holdings Trust (SGX: NS8U), which yields 7.1%, and Singapore Press Holdings (SGX: T39) that yields nearly 10%.

But neither can really be considered as value shares. Singapore Press Holdings is trading at twice its book value and Hutchinson priced at a multiple of over three times its Net Asset Value.

It would appear that no one stock ticks all the boxes that a value investor would like to see. That said, the average PE of the index is around 14, which equates to an earnings yield of 7%. This is not overly expensive when compared to, say, leaving money in a savings account.

In light of the dearth of bargains, some value of investor might choose to be more relaxed with the criteria regarding PEs, yields and price to book. Others might choose to sit tight, be patient and wait for the right opportunity to rise.

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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.