City Developments Limited (SGX: C09), or CDL, is a real estate company listed on the Singapore market, with a presence 28 different countries and regions.
Its business segments within the real estate segment include property development, hotel operations and rental properties.
between 1 Jan to 31 Dec 2018, CDL’s share price including reinvested dividends, dropped by 33.8% compared to a drop of 6.5% for the Straits Times Index (SGX: ^STI).
So, is a bargain at current prices?
For this we will be using four metrics, namely, its price-to-earnings (P/E) ratio, its price-to-book (P/B) ratio, its dividend yield and its net-debt-to-equity ratio.
The real estate conglomerate has a trailing twelve months (TTM) earnings per share of S$0.66. The company’s current share price stands at S$8.85. So, its P/E ratio is 13.4, which is lower than its one-year historical PE ratio of 16.
Its EPS over the past four years (2014-2017) has been between S$0.58 to S$0.83, indicating that its current TTM EPS is in the middle of the range.
At the end of the third quarter of 2018, CDL reported a net asset value (NAV) of S$11.2. This results in a P/B ratio of 0.79 at current prices.
A company with a P/B ratio of less than 1 implies that investors are getting the assets held by the company for a discount. This could provide a margin of safety for investors.
For reference, CDL’s NAV has been steadily increasing over the past four years, rising moving from S$9.25 in 2014 to S$10.54 in 2017. This could show that CDL is consistently increasing value for its shareholders.
At the end September 2018, the real estate conglomerate had net debt of S$2.8 billion and total equity of S$12.4 billion, indicating a net-debt-to-total equity ratio of 23%. This is in line with its four-year (2014-2017) range from 9% to 26%, although it’s at the higher end of the range. A 23% net-debt-to-equity ratio is considered relatively conservative.
Lastly, CDL’s dividend has increased slightly over the last four years from S$0.16 per share in 2014 to S$0.18 per share in 2017.
However, investors should note that the dividends include special payouts, from 2014 to 2016 and increased slightly in 2017. Assuming CDL pays out a dividend at the same rate as 2017, this would lead to a yield of 2.03% at current prices.
Looking at the four metrics, it seems like CDL might be a bargain at current prices. All four metrics point towards its valuations being on the attractive side. It could be worth a closer look.
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The Motley Fool Singapore writer Esjay contributed towards this article. Esjay does not own shares in City Development.
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.