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Health Management International Ltd Is Trading Close to Its 52-Week Low. Is It Cheap Now?

Health Management International Ltd (SGX: 588) is a healthcare provider with a presence in Singapore, Malaysia, and Indonesia.

The company owns and operates the Mahkota Medical Centre in Malacca and Regency Specialist Hospital in Iskandar Malaysia with a total bed capacity of over 500. HMI also owns and operates the HMI Institute of Health Sciences in Singapore.

At a current price of S$0.54, Health Management International’s stock price is just 2 cents higher than its 52-week low of S$0.52. The low stock price raises a question: Are shares of Health Management International cheap now? It’s an important question because if the company’s shares are cheap, it might be a good opportunity for investors to buy shares.

Unfortunately, there is no easy answer. However, we can still get some insight by comparing Health Management International’s current valuation with the market’s valuation. The three valuation metrics I will focus on are the price-to-book (P/B) ratio, price-to-earnings (P/E) 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).

Health Management International currently has a P/B ratio of 5.2, which is higher than the SPDR STI ETF’s P/B ratio of 1.1. Similarly, its P/E ratio, at 24.8, is higher than that of the SPDR STI ETF’s, at 11.5. Also, the medical service provider’s dividend yield of 1.2% is lower than the market’s yield of 3.5%. The lower a stock’s yield, the higher its valuation.

Health Management International seems to be priced at a premium to the market average due to its high P/B ratio, high P/E ratio, and low 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.