MENU

Value Hunting Amongst Singapore’s Bright Sparks

telecommunication tower telcoThe electronic and electrical equipment sector is a thriving one in Asia Pacific with more than 1,400 stock listings. Whilst most of these originate from Taiwan, China and Japan, Singapore is home to almost 50 primary listings.

Singapore’s ten largest companies in the “sparky” sector have an average dividend yield of close to 6%. Additionally, several of the companies are priced below their book value.

Could this be fertile hunting ground for value investors? Perhaps – but we might need to tread carefully.

Elec & Eltek International Company Limited (SGX: E16) has a particularly strong yield at 9%. It is also priced at just below its book value with a price-to-book ratio of 0.9. However value investors could be discouraged by the company’s valuation of nearly 30 times earnings.

Valuetronics Holdings Limited (SGX: BN2) has a more appealing PE. It is valued at 7.7 times earnings or around half the market average. It also has a good, albeit less impressive, yield of 5%. However, Valuetronics is priced at 1.6 times its book value.

Suffering a similar fate is Tai Sin Electric (SGX: 500). Its PE and yield are 6.7 and 6.2%, respectively.  But it is currently priced at a premium of 20% above its book valued.

Could Frencken Group Limited (SGX: E28) save the day for the Electronic & Electrical Equipment sector?

Frencken is valued at around 7.7 earnings. This puts it on level-pegging with Valuetronics. However, its yield is slightly lower at 3.9%. That said, the yield is marginally higher than the market average.

Frencken is also priced at a 20% discount to its book value. But the company does have some debt on its book. However, a steadily growing bottom line more than covers the annual interest repayments.

The Motley Fool's purpose is to help the world invest, better. Click here now for your FREE subscription to Take Stock -- Singapore, The Motley Fool's free investing newsletter. Written by David Kuo, Take Stock -- Singapore tells you exactly what's happening in today's markets, and shows how you can GROW your wealth in the years ahead.

Like us on Facebook to keep up-to-date with our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

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.