Walter Schloss, dubbed a Superinvestor by Warren Buffett, was a deep value investor. He was very keen on stocks that were selling at 52-week low prices.
In Singapore, even among the blue-chip companies of the Straits Times Index (SGX: ^STI), there are a few stocks that are at or near their respective 52-week low prices right now.
Let’s look at three of them – Singapore Telecommunications Limited (SGX: Z74), Jardine Cycle & Carriage Ltd (SGX: C07), and Wilmar International Limited (SGX: F34) – starting with the stock that is closest to its 52-week low price.Source: Google Finance and SGX StockFacts
Singtel announced earlier in the month that it had sold 150,000 shares in ACPL Marine Pte Ltd (AMPL) to ASEAN Cableship Pte Ltd for S$15 million. With the sale, Singtel’s stake in AMPL is reduced to around 16.7% from 41.7%. According to the regulatory filing by the telecommunications outfit, “AMPL owns and charters maintenance-cum-laying cableships.”
For the three months ended 30 September 2017, Singtel’s net profit almost trebled to a record of S$2.89 billion, mainly due to a one-off gain from the divestment of its stake in NetLink NBN Trust (SGX: CJLU) through an initial public offering (IPO) held in July 2017. Underlying net profit, which is net profit before exceptional items, fell 4.1% year-on-year to S$929 million, on the back of lower contributions from associates. Revenue for the quarter increased by 6.9% year-on-year to S$4.37 billion as all business segments performed well.
Jardine Cycle & Carriage announced last month that it had upped its stake in Vietnam-listed Refrigeration Electrical Engineering Corporation (REE) from about 23.6% to 23.9%. It paid around US$2 million for the purchase.
The acquisition came hot on the heels of another investment in the country. In November, Jardine Cycle & Carriage invested US$1.2 billion for a 10% stake in Vietnam Dairy Products Joint Stock Company (Vinamilk), a leading dairy producer in Vietnam with a market share of approximately 58%.
Jardine Cycle & Carriage is the second largest overseas investor in Vinamilk after Fraser and Neave Limited (SGX: F99), which has a 19.2% stake. According to VietNamNet, REE and Vinamilk are among the most prestigious listed companies in Vietnam in 2017.
Agribusiness group, Wilmar International, saw its top line in 2017’s third quarter inch up by 0.4% year-on-year to US$11.13 billion. However, its net profit and core net profit dropped by 5.7% and 15.9%, respectively. Revenue rose due to higher sales from its Oilseeds and Grains business segment. Investors would know how the company performed for the whole of 2017 when it announces its 2017 fourth quarter results on 22 February 2018.
With the three aforementioned blue-chip stocks trading near their respective 52-week lows, are they a bargain?
To get a quick answer, we can compare the valuation of the SPDR STI ETF (SGX: ES3), an exchange-traded fund which tracks the fundamentals of the Straits Times Index, to the respective valuations of the trio.
Currently, the SPDR STI ETF has a PE ratio of close to 12, and a dividend yield of around 3%. This could suggest that Singtel is worth a second look with its PE ratio being two points lower than the market, and its dividend yield being higher than the market. Jardine Cycle & Carriage and Wilmar International do not look that cheap, despite them being near 52-week lows.
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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 Sudhan P doesn’t own shares in any companies mentioned.