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Could Vicom Be A Value Industrial Services Stock?

vicom logoIndustrial Stocks can be subdivided into three categories – capital goods, transportation and commercial & professional services.

The commercial and professional services compromises companies engaged in areas such as commercial printing, environmental services, office services, support services, security and alarm services, human resources and employment services and research and consulting services. Phew!

The Singapore Stock Exchange lists 32 such stocks with a market capitalisation of just over S$5b. Three companies, namely United Envirotech (SGX: U19), Keppel Infrastructure Trust (SGX: LH4U) and Vicom (SGX: V01) account for over half of the sub-sector’s total value.

United Envirotech, the largest company by some way with a market capitalisation of around S$1.2 billion, provides environmental engineering services primarily in China and Malaysia. With a Price-to-Earnings of close to 30, a price to book ratio of 6 and a dividend yield of only 0.2%, United Envirotech struggles to meet the requirements of value investors.

Vicom and Keppel Infrastructure Trust, formerly known as K-Green Trust, suffer similar fates. The former trades at around 20 times earnings and the latter at a whopping 47 times. One saving grace for Keppel Infrastructure Trust is the dividend yield of 7.5%, while the price-to-book ratio of just 1.1 makes it seem not entirely bad value.

Vicom similarly has a decent yield on offer, albeit it at a slightly more modest 3.6%. However its price to book ratio of 5 is likely to be just as unappealing to value investors as that of United Envirotech.

All is not lost however, as a couple of the smaller Industrials may still hold out some hope for value investors. Dutech Holdgings (SGX: CZ4), for example, manufactures and wholesales high security products to North and South America, China, Europe and other Asia Pacific Regions.

Dutech trades at a low earnings multiple of four, which is some way below the market average of 14. It matches Keppel in offering a tempting dividend yield of 7.5% and is priced at a 10% premium to its book value.

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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.