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Genting Singapore PLC’s Stock Price Is Up By 24% In The Last 12 Months: Is It Expensive Now?

Genting Singapore PLC (SGX: G13) is the operator of an important tourism landmark in Singapore, the integrated resort, Resorts World Sentosa. Among the resort’s many attractions are one of Singapore’s two casinos and the Universal Studios Singapore theme park.

In Genting Singapore’s latest earnings for the year ended 31 December 2016, there are signs that a turnaround in its business may be happening. For instance, in the fourth quarter of 2016, the company’s revenue inched up by 2% year-on-year. As a likely result, Genting Singapore’s share price today is 24% higher than what it was 12 months ago.

Given this rally, some investors may be wondering: Is Genting Singapore’s current valuation cheap, fair or expensive?

Unfortunately, there is no easy answer since there are many ways to look at a company’s valuation. But, we can still get some insight by comparing Genting Singapore’s current valuations 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 the fundamentals of Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).

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

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

It turns out that Genting Singapore’s PB ratio of 1.35 is around 13% higher than the market’s PB ratio of 1.19. So, the company is slightly more expensive than the SPDR STI ETF in terms of the PB ratio.

The next chart I have plots the PE ratios for both Genting Singapore and the SPDR STI ETF:

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

Based on the PE ratio, Genting Singapore is nearly four times as expensive as the market (a PE ratio of 48.0 vs 13.0).

Lastly, we’re down to the dividend yields of Genting Singapore and the SPDR STI ETF:

Dividend yield of Genting Singapore and SPDR STI ETF
Source: S&P Global Market Intelligence and SPDR STI ETF website

Genting Singapore has a dividend yield of 2.8% at the moment, which is slightly lower than the market’s yield of 3.0%.

In sum, Genting Singapore is quite clearly priced at a premium to the market given its higher PB and PE ratios, and lower dividend yield.

One thing worth noting here is that the company is possibly in a turnaround phase currently. So, its current level of profits may not reflect its normalised earnings power in the future.

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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.