Here’s How Singapore Post Limited’s Valuation Compares With The Overall Market

Singapore Post Limited (SGX: S08) is a postal and logistics services provider.

Over the past two years, the company has been in the spotlight due to both positive news (such as Chinese eCommerce giant Alibaba investing in the company) and negative ones (such as questions being raised on its corporate governance and the sudden resignation of its previous chief executive, Dr. Wolfgang Baier, in December 2015).

Singapore Post has also been actively acquiring eCommerce logistics over the same period in a bid to steer itself away from its traditional mainstay postal services business and ride on the potential growth of eCommerce in the region.

Given all the above that has been surrounding Singapore Post, I thought it would be interesting to have a look at the company’s valuations and compare them with the market’s.

The three valuation metrics I will focus on are the price-to-book (PB) ratio, price-to-earnings (PE) ratio, and dividend yield. I will be using the SPDR STI ETF (SGX: ES3) as a proxy for the market. The SPDR STI ETF is an exchange-traded fund that tracks Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).

Here’s a chart showing the PB ratios of Singapore Post and the SPDR STI ETF:

Singapore Post and SPDR STI ETF PB ratio
Source: S&P Global Market Intelligence and SPDR STI ETF website

At Singapore Post’s current share price, it has a PB ratio of 2.1, which is 75% higher than the SPDR STI ETF’s PB ratio of 1.2.

The next chart we have is for the PE ratio of Singapore Post and the market:

Singapore Post and SPDR STI ETF PE ratio
Source: S&P Global Market Intelligence and SPDR STI ETF website

Singapore Post comes in with a higher valuation again. This time, its PE ratio of 16.1 is 13% higher than the SPDR STI ETF’s earnings multiple of 12.7.

We’re down to the last valuation metric – the dividend yield – and you can see it in the chart below:

Singapore Post and SPDR STI ETF dividend yield
Source: S&P Global Market Intelligence and SPDR STI ETF website

This time, Singapore Post is the one with the lower valuation. Its dividend yield of 4.7% is higher than the SPDR STI ETF’s dividend yield of 3.0%. (The higher the yield is, the lower a stock’s valued.)

To sum up what we’ve seen, Singapore Post has a higher PB and PE ratio when compared to the market. But, it has a superior dividend yield.

None of the above data should be taken to mean that Singapore Post will be a poor or good investment going forward. Valuation metrics are just one of the many aspects about a company that investors should study before any investing decision can be reached.

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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.