Genting Singapore Ltd (SGX: G13) is the operator of the integrated resort, Resorts World Sentosa. Among the resort’s many attractions are one of Singapore’s two casinos and the Universal Studios Singapore theme park.
At the current price of S$0.94 (at the time of writing), Genting Singapore’s shares are trading at 29% below its 52-week high price of S$1.32. This raises a question: Is Genting Singapore cheap now? This question is important because if the firm’s shares are cheap, it might be an excellent buying opportunity for investors.
Unfortunately, there is no easy answer. However, we can still get some insight by comparing Genting Singapore’ current valuations with the market’s valuation. 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).
Genting Singapore currently has a PB ratio of 1.5, which is higher than the SPDR STI ETF’s PB ratio of 1.1. Similarly, its PE ratio is higher than that of the SPDR STI ETF’s (15.0 vs 12.6). On the other hand, the conglomerate’s dividend yield of 3.7% is higher than the market’s yield of 3.5%. The higher a stock’s yield is, the lower is its valuation.
In sum, we can argue that Genting Singapore is priced at a slight premium to the market average due to its high PB ratio and PE ratio, offset partially by its high dividend yield. In other words, income investors might be interested in taking a more in-depth look into Genting Singapore.
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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.