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3 Blue-Chip Shares Near Their 52-Week Lows: Are They Cheap?

Sudhan P.
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Even though the Straits Times Index (SGX: ^STI) has been rising of late, there are still some key stocks within the index that are lagging behind. Here, let’s look at three blue-chips that are trading near their respective 52-week low share prices.

Enter the blue-chips

Those blue-chip shares are Hutchison Port Hldg Trust (SGX: NS8U), Singapore Press Holdings Limited (SGX: T39), and Singapore Airlines Ltd (SGX: C6L).

Source: S&P Global Market Intelligence (Note: Price for Hutchison Port Holdings Trust has been converted to Singapore dollars from US dollars; data as of 18 April 2019)

Woes at Hutchison Port Holdings Trust continue. For the financial year ended 31 December 2018, the business trust’s distribution per unit fell by 17.5% to 17.0 HK cents, down from 20.6 HK cents in the previous year. The trust saw a loss of HK$11.6 billion for 2018, mainly due to non-cash impairment losses. Excluding the asset impairment, net profit attributable to unitholders would have been lower by 22% to HK$737.7 million.

Hutchison Port Holdings Trust is currently the best dividend yielder among the Straits Times Index components, but as is clear, we shouldn’t be misled by the high yield alone. Investors should focus on the business fundamentals of the trust and sustainability of the distributions. On Friday, 26 April, Hutchison Port Holdings Trust will reveal its 2019 first-quarter earnings, so investors should be on the lookout to see if things improve.

As for Singapore Press Holdings, operating revenue for its second quarter ended 28 February 2019 declined by 4.4% year-on-year to S$223.3 million while net profit plunged 25.7% to S$29.7 million. You can jump in here to learn more about the media giant’s latest earnings.

Meanwhile, Singapore Airlines had a mixed set of results for its third quarter ended 31 December 2018. The airline’s revenue rose 6.5% to S$4.3 billion largely due to growth in passenger traffic. However, its net profit decreased by 27% to S$284.1 million.

Cheap shares?

With the blue-chips selling near their respective 52-week lows, are they cheap?

To get a quick answer, we can compare the valuation of the SPDR STI ETF (SGX: ES3), an exchange-traded fund that tracks the fundamentals of the Straits Times Index, to the valuation of the respective companies.

As of 18 April 2019, the SPDR STI ETF had a PE ratio of 13.0, a PB ratio of 1.2 and a dividend yield of 3.5%. Based on the PE ratio alone, all companies look expensive. However, income investors may be interested in the three blue-chip shares due to their high dividend yields. Having said that, before investing in any of the companies based on dividend yields alone, investors should research if the yields are sustainable or not.

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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 Sudhan P doesn’t own shares in any companies mentioned.

Motley Fool Singapore 2019