16 Valuation Charts of the Most Traded High ROE Stocks in Singapore

This is a quick follow-up on SGX’s article, “Valuations of Singapore’s Most Traded High ROE Stocks“.

These 16 stocks’ ROEs ranged between 10% and 26% and their Price-to-book (PB) ratios are lower than their 5-year averages. They are also highly traded in the market.

I understand why SGX Research did this screen. Firstly, high ROE stocks usually indicate quality of a business and they have higher-than average ability to generate earnings for the shareholders.

Secondly, a quality stock usually sells at high prices and filtering those that are trading below their average PB ratios is an indication of cheapness.

Thirdly, high trading volume is a proof of the stocks’ popularity.

Hence, it sounds like a variation of Joel Greenblatt’s Magic Formula, whereby the screen seeks to find quality businesses trading at cheap prices.

I wanted to expand the data to 10 years rather than just 5 years. Most importantly, I wanted to chart out the PB range so that it is easier for you to visualise.

Before I reveal the charts, please note that we should not simply pick a few stocks from the screened results. The list is meant to be a starting point for us to evaluate further.

#1 Jardine C&C (SGX:C07)

Jardine C&C (SGX:C07) is trading at its lowest PB ratio of 0.9 in the past 10 years. This is even lower than -2 standard deviations from the average PB ratio of 2.2.

ROE = 14%

#2 SATS (SGX:S58)

SATS (SGX:58) is trading at a PB Ratio of 1.8, which is slightly below -1 standard deviation from the average PB ratio of 2.8.

ROE = 14%

#3 ComfortDelGro (SGX:C52)

ComfortDelGro (SGX:C52) is trading at a PB ratio of 1.3, which is near the lowest PB in the past 10 years. This is about -2 standard deviations from the average PB ratio of 2.1.

ROE = 10%

#4 Dairy Farm (SGX:D01)

Dairy Farm (SGX:D01) is trading at a PB ratio of 5.4, which is near the lowest PB in the past 10 years. This is slightly below -1 standard deviation from the average PB ratio of 9.8.

ROE = 28%

#5 Jardine Matheson (SGX:J36)

Jardine Matheson (SGX:J36) is trading at its lowest PB Ratio of 1.1 in the past 10 years. This is even lower than -2 standard deviations from the average PB ratio of 2.0.

ROE = 10%

#6 UOB (SGX:U11)

UOB (SGX:U11) is trading around its lowest PB ratio of 0.9 in the past 10 years. This is even lower than -2 standard deviations from the average PB ratio of 1.3.

ROE = 12%

#7 DBS (SGX:D05)

DBS (SGX:D05) is trading below -1 standard deviation from the average PB ratio.

ROE = 13%

#8 Frasers Centrepoint Trust (SGX:J69U)

Frasers Centrepoint (SGX:J69U) is trading at a PB ratio of 0.9, which is near the lower PB in the past 10 years. It is also trading at -2 standard deviations from the average PB ratio of 1.1. Explore more Singapore REITs here.

ROE = 10%

#9 OCBC (SGX:O39)

OCBC (SGX:O39) is trading around the lowest PB ratio of 0.9 in the past 10 years. This is even lower than -2 standard deviations from the average PB ratio of 1.3.

ROE = 11%

Read our comparison of the Singapore bank stocks here

#10 CapitaLand (SGX:C31)

CapitaLand (SGX:C31) is trading at a PB ratio of 0.6, which is around -2 standard deviations from the average PB ratio of 0.8.

ROE = 10%

#11 ThaiBev (SGX:Y92)

ThaiBev (SGX:Y92) is trading at a PB ratio of 3.2, which is close to -1 standard deviation from the average PB ratio of 4.0.

ROE = 19%

#12 ST Engineering (SGX:S63)

ST Engineering (SGX:63) is trading at a PB ratio of 4.6, which is around -1 standard deviation from the average PB ratio of 5.2.

ROE = 26%

#13 Mapletree Com Trust (SGX:N2IU)

Mapletree Com Trust (SGX:N2IU) is trading at a PB ratio of 1.0, which is about 1 standard deviation from the average PB ratio of 1.2.

ROE = 10%

#14 CapitaR China Trust (SGX:AU8U)

CapitaR China Trust (SGX:AU8U) is trading at a PB ratio of 0.8, which is slightly below -1 standard deviation from the average PB ratio of 1.0.

ROE = 10%

#15 Frasers L&C Trust (SGX:BUOU)

Frasers L&C Trust (SGX:BUOU) is trading at a PB ratio of 1.1 and is close to the average PB ratio of 1.2. Do note that this counter only had 4 years of history.

ROE = 11%

#16 Venture (SGX:V03)

Venture (SGX:V03) is trading at a PB ratio of 1.8, which is above the average PB ratio of 1.5.

ROE = 15%

Conclusion

This list of stocks was inspired by SGX Research. They picked the most traded high ROE stocks that are trading below their average PB ratios. This screen is about identifying familiar stocks with good businesses that are cheap at the moment.

I have plotted the PB ratio charts of these stocks and stretched the period to 10 years. You should find the charts easier to spot the cheapness relative to their average trading range.

Hence, it serves as a good starting point to generate trade ideas but one should evaluate further before carrying out any investments. Good luck!