Could Singapore Airlines Fly Into Value Territory?

SIALogoThe Singapore Stock Exchange is home to 32 transport stocks. These include Singapore’s flagship airlines Singapore Airlines (SGX: C6L) and budget carrier Tiger Airways Holdings (J7X). Another well-known name on the list is taxi and bus operator ComfortDelGro (SGX: C52).

However, it is not the larger and more expensive stocks that appear to provide the best opportunities for value hunters. Penguin International Limited (SGX: P13), for example, which is worth S$150m, is involved in almost every stage of marine and offshore services.

The company designs, constructs, repairs and operates commercial vessels including crew boats and passenger ferries. Penguin is priced at 6.9 times earnings, which is around half the market average. It has also seen steady growth in its bottom-line profits. However a yield of only 2.2% and price to book ratio of 1.3 could leave value investors a little unconvinced for the time being.

Also involved in the marine side of transport is Rickmers Maritime (SGX: B1ZU). The company owns and operates 16 containerships internationally.

Trading at a slightly higher valuation than Penguin of around nine time earnings, the company could offer better value with its more appealing yield of 9.9%. It also trades at 40% of its book value. However, potential investors should be aware of the high levels of debt on the company’s books along with a slightly shrinking bottom line. Rickmers, which is valued at S$250m, has net debts of S$547m.

Vibrant Group (SGX: F01) is a provider of air and ocean freight services. It has debts too, though at a more manageable level. Annual interest repayments are comfortably covered by a healthy growing bottom line. With an attractive valuation of around seven times earnings, a dividend yield of 4.4% and price to book of 0.9 vibrant could be worth a closer look by value investors.

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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.