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Which Restaurant Stock Has The Cheapest Valuation Now?

With 13 restaurant shares listed in Singapore, there is a multitude of investment options for investors who are looking for exposure in the food and beverage (F&B) industry. While the F&B industry in Singapore is highly competitive, it is fairly resilient and fast-growing. Many of the restaurant stocks are also actively expanding their network of restaurants overseas, opening up more avenues of growth.

I did a quick screen of the top 10 largest restaurant stocks to see how they stack up in terms of valuation. The table below summarises my findings:

Source: Author’s compilation of data from SGX StockFacts

Lowest PE: Koufu Group Ltd (SGX: VL6) and Kimly Ltd (SGX: 1D0)

As you can see, the 10 stocks are trading at a very wide range of price-to-earnings (PE) multiples from a low of 13 to a high of 65.

At the time of writing, the two stocks with the lowest PE multiples are food court operator Koufu Group Ltd and Kimly Ltd.

Listed in July last year, Koufu operates food courts, coffee shops, and hawker centres. Additionally, it also operates F&B stalls and owns three full-service restaurants.

Kimly is one of the lesser-known F&B stocks in the market. But despite its relative obscurity, the group has an extensive network of food outlets and food stalls across Singapore. The company boasts a market cap of S$278 million, making it one of the bigger restaurants stocks in the market.

Lowest price-to-book ratio: ABR Holdings Ltd (SGX: 533)

From the right column of the table, we can also see that ABR, with a price-to-book ratio of 1.6, has the lowest PB ratio among the top 10 largest restaurants in Singapore.

ABR is a manufacturer of ice cream and also operates F&B outlets such as Swensen’s, Yogen Fruz, and Chilli Padi.

The Foolish bottom line

While it is not necessarily the case that companies with the best valuation always make the best long-term investment, a low valuation still offers a bigger opportunity for upside potential. If a stock is trading at an unfairly low valuation, investors can make a tidy profit when the broader investing community realises the price-valuation discrepancy.

This article, hopefully, provides a useful starting platform for interested investors to do further research on the above-listed companies.

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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 contributor Jeremy Chia does not own shares in any company mentioned.