Mapletree Commercial Trust (SGX: N2IU), or MCT, is the owner of Singapore’s largest mall, VivoCity, together with MBC I, PSA Building, Mapletree Anson and MLHF.
At its current price of S$1.96 (at the time of writing), MCT’s shares are up 22% in the last 12 months, from S$1.61. This raises a question: Is MCT still cheap given its strong returns? This question is important because if the REIT’s shares are cheap, it might still be a good opportunity for investors.
Unfortunately, there is no easy answer. However, we can still get some insight by comparing MCT’s current valuation with the market’s valuation. The two valuation metrics I will focus on are the price-to-book (PB) ratio and distribution yield.
I will be using the average PB ratio and distribution yield for the 39 REITs that are listed on Singapore’s stock market. With that, let’s look at the comparison below:
Source: Source: Yahoo Finance, OCBC Weekly S-REITs Tracker
From the above, we can see that MCT’s distribution yield is lower than that of the market average, indicating that it’s trading at a higher valuation. Similarly, its high PB ratio suggests that MCT is trading at a premium valuation.
In sum, we can argue that MCT current valuation is expensive as compared to the market average. For investors who are still interested to purchase its stock at the current valuation, it’s important that they carry out research to better understand the long term prospects of the REIT.
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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.