Catalist is Singapore Stock Exchange’s junior board that was launched seven years ago this November.
In the main, Catalist companies are more likely to be growth shares. The junior exchange tends to be home to smaller businesses in their early stage of development with the potential to grow significantly faster than the market or the industry average.
One feature typical of such companies that is likely to make them unfeasible as value investments is that they are often unprofitable. Even if they are making money it is reasonable to expect most, if not all, of the company’s earnings to be reinvested in the business to drive growth rather than be paid out as dividends.
However, it could be dangerous to jump to quick conclusions. The ten largest capitalised companies on the Catalist have a combined market value of just over S$4 billion. Of these, six are profitable and four of these pay a dividend.
Paying out the best dividend with a generous yield of 6.8% is Duty Free International Limited (SGX: 5SO). The Malaysian-based duty free retailer has a presence at airports, seaports, border towns and popular tourist destinations with a total of 41 outlets in the peninsula. Whilst the yield is good and the company also boast cash on its books, it could be seen as expensive with a price-to-book ratio of two and an earnings multiple of 16.6, which is above the market average.
TalkMed Group Limited (SGX: 5G3) is the second largest by market capitalisation. It is also a dividend-paying company. The yield is lower than Duty Free International’s at only 1.1%. Whilst its price-to-earnings multiple of 7.6 is around half the market average, its price-to-book, which stands at 15.7, tells a different story.
One swallow does not make a summer. And nor do two companies define the Catalist market. But there are unlikely to be too many value opportunities for value seekers amongst Catalist shares. However, that doesn’t mean we can’t continue to look.
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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.