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The Number Behind Intriguing Real Estate Stocks

Late last year, bourse operator Singapore Exchange Limited  (SGX: S68) launched SGX Thematic Indicesa suite of new stock market benchmarks for a number of different sectors in Singapore’s stock market. One of the indices launched was the SGX Real Estate Total Return Index, consisting of 54 real estate companies in Singapore.

A recent article from Singapore Exchange gave insight into the diverse range of real estate companies that the index offers. Here are some interesting points that I noted from the article (data mentioned below are as of 11 March 2016 unless otherwise stated):

  1. The total market capitalisation of the 54 real estate companies was S$125 billion. This represented 14% of the total market capitalisation of all stocks listed on Singapore’s stock market.
  2. The average dividend yield for the 54 companies was a healthy 6.2%. For perspective, the SPDR STI ETF (SGX: ES3), an exchange traded fund which mimics the fundamentals of the Straits Times Index (SGX: ^STI), offered a dividend yield of 3.5% as of 15 March 2016.
  3. Ascendas Real Estate Investment Trust (SGX: A17U) and Mapletree Industrial Trust (SGX: ME8U) both offered a trailing yield of 6.5% and 7.1% respectively, higher than the average yield on offer. Both companies are also among the top ten largest companies or REITs in the index.
  4. Seven of the top ten companies, by market capitalisation, are also members of the Straits Times Index. The septet include CapitaLand Mall Trust (SGX: C38U), CapitaLand Limited  (SGX: C31)Hongkong Land Holdings Limited (SGX: H78)Global Logistics Properties Ltd (SGX: MC0)UOL Group Limited (SGX: U14)City Developments Limited (SGX: C09) and Ascendas REIT. Incidentally, an eighth member, namely CapitaLand Commercial Trust (SGX: C61U) is set to join this group; the REIT has been earmarked to replace Noble Group Limited (N21) in the Straits Times Index.
  5. The average price to book ratio for the SGX Real Estate Total Return Index stood at 0.8. Hongkong Land has both the largest market capitalisation and the lowest price to book ratio of the top 10 components in the SGX Real Estate Total Return Index as of last Friday. Hongkong Land had a PB ratio of just 0.5.

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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 Chin Hui Leong owns shares in Hongkong Land Holdings.