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The Great September Sale: 6 Cheapest Retail Shares in Singapore

The retail scene in our Lion City is still alive, if the performances by some of the Singapore retail stocks are anything to go by.

Earlier this week, the Singapore Exchange (SGX: S68) released a report showing the five best-performing retail stocks which averaged a year-to-date total return of 21.5%. The shares are part of SGX’s cluster of 23 retail stocks (excluding distributors).

Of the 23 shares, there are some which are selling at low price-to-earnings (PE) valuations. Let’s look at six of the cheapest stocks (the first three can be found here; data as of 7 September 2018).

Company #4: Moneymax Financial Services Ltd (SGX: 5WJ)

Moneymax is a pawnbroker, retailer and trader of pre-owned luxury items which opened its first outlet in 2008. The company has since expanded its operations to 70 outlets. In February 2015, Moneymax launched MoneyMax Online, making it Singapore’s first pawnbroking chain to go online.

The following shows Moneymax’s financial performance from 2013 to 2017:

Source: Moneymax 2017 annual report

Over the past five years, the pawnbroker has grown its revenue and profit net of tax by 24.3% and 42.4% on an annualised basis.

However, for the latest financial period, which is for the second quarter ended 30 June 2018, revenue and profit net of tax fell by 16.3% and 0.8% year-on-year respectively. The company commented that challenges faced in the local retail market continue to affect its performance, and this has resulted in the lower top-line growth.

Year-to-date, Moneymax’s total return was -9.5%. As of 7 September, the pawnbroker had a PE ratio of 7.5 times and a dividend yield of 3%.

Company #5: The Hour Glass Ltd (SGX: AGS)

The Hour Glass, or THG for short, is a luxury watch retailer with a presence in many key cities in the Asia-Pacific region. Its competitor in the space is Cortina Holdings Limited (SGX: C41), which was featured as the second-cheapest retail stock in this series.

For the first quarter ended 30 June 2018, THG’s revenue grew 10% year-on-year to S$180.7 million while its net profit surged 105% to S$14.3 million. For full coverage of the earnings, you can head here.

THG’s year-to-date total return came in at 3.1%. At its closing price of S$0.66 on 7 September, it sported a PE ratio of 8.1 times and a dividend yield of 3%.

Company #6: Challenger Technologies Limited (SGX: 573)

Challenger is an operator of the Challenger chain of IT retail stores and online tech marketplace, Hachi.tech. The group now has a total of 37 stores comprising one flagship Challenger megastore store, 25 Challenger superstores and 11 small format stores in Singapore.

Challenger is one of the highest dividend-yielding companies out of the 23 retail stocks with a dividend yield of 6.9%. Its dividend looks likely to be sustained going forward, given its growing free cash flow and a conservative dividend payout ratio.

Year-to-date, Challenger’s total return stood at 16.9%. As of 7 September, the IT retailer had a stock price of S$0.48 and a PE ratio of 8.7.

The Foolish takeaway

Cheap companies don’t necessarily mean they would make great investments. Investors interested to invest in any of the companies featured in this series should do their due diligence before investing their money.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Singapore Exchange. Motley Fool Singapore writer Sudhan P owns shares in Singapore Exchange.