Straits Trading Co Ltd (SGX: S20) is an investment company with stakes in real estate, hospitality, resources, and investments.
Recently, the company appeared on a screen I ran that looked for stocks that are near 52-week lows, which prompted me to look further into it.
In this article, I would like to share a few interesting things about the company’s business.
1. It has a multi-year low valuation
Straits Trading is currently trading at a price-to-book ratio of 0.62. This is nearly 50% lower than the PB ratio of 1.15 that the SPDR STI ETF (SGX: ES3) has. The SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of the Straits Times Index (SGX: ^STI).
The company’s PB ratio of 0.62 is also near a five-year low as you can see in the chart below:
Source: S&P Global Market Intelligence
2. It has significant ownership in other Singapore-listed entities
Straits Trading has significant stakes in other real estate entities in Singapore’s stock market. Its ownerships are as follows:
Source: 2015 annual report
3. It is a major producer of tin metal
Malaysia Smelting Corporation Berhad is a 54.8%-owned subsidiary of Straits Trading. It is the world’s second largest producer of refined tin metal and its core operations are located in Butterworth and Perak in Malaysia.
4. It recently set up a new asset management company
Straits Trading also has an asset management arm, SRE Capital, that specialises in investing in publicly listed real estate and infrastructure related securities within the Asia Pacific region.
SRE Capital was established fairly recently in February 2015 and received its Capital Services Market Licence from the Monetary Authority of Singapore in March the same year. The asset manager launched its first fund – the SRE Asian Asset Income Fund – on 1 April 2015.
Straits Trading describes the fund as a “dividend paying income fund that invests in a diversified portfolio of real estate-related equities listed across Asia Pacific. The fund predominantly invests in real estate investment trusts.”
5. It has a major controlling shareholder
Straits Trading is majority-owned by The Cairns Pte. Ltd, a member of the Tecity Group which is founded by the late banker and philanthropist Tan Sri (Dr) Tan Chin Tuan. As of 16 March 2016, The Cairns held a 70.04% stake in Straits Trading.
Given the overwhelming control that The Cairns has in Straits Trading, it is important for minority investors to understand the philosophy of the major shareholder.
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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 Lawrence Nga doesn’t own shares in any companies mentioned.