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CapitaLand Limited Is Trading Close To Its 52-Week Low Price: Is It Cheap?

CapitaLand Limited (SGX: C31) is a real estate developer and owner, and is one of the largest companies in Singapore’s stock market. Its diversified global real estate portfolio includes integrated developments, shopping malls, serviced residences, offices and homes.

At the current price of S$3.05 (at the time of writing), CapitaLand’s shares are just 7 cents higher than the 52-week low price of S$2.98. This raises a question: Is CapitaLand cheap now? This question is important because if the firm’s shares are cheap, it might be a good opportunity for investors.

Unfortunately, there is no easy answer. But, we can still get some insight by comparing CapitaLand’s current valuations with that of the market. 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).

CapitaLand currently has a PB ratio of 0.7, which is lower than the SPDR STI ETF’s PB ratio of 1.1. In addition, its PE ratio is lower than that of the SPDR STI ETF’s (9.2 vs 10.7). Similarly, the property outfit’s dividend yield of 3.9% is higher than the market’s yield of 3.6%. The higher a stock’s yield is, the lower is its valuation.

In sum, we can argue that CapitaLand is priced at a discount to the market average due to its low PB ratio, low PE ratio and high dividend yield.

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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.