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3 Cheap China-Based Companies Listed in Singapore

Sudhan P.
Misty Great Wall of China

Apart from China, many China-listed companies call Hong Kong their home. However, many foreign investors may not know that there are a couple of China-based companies listed in Singapore as well.

Here’s a flavour of three prominent Chinese companies listed on the Singapore stock exchange. A bonus is that they are all selling at valuations (based on price-to-earnings (P/E) or price-to-book (P/B) ratios) lower than that of the Straits Times Index (SGX: ^STI), Singapore’s stock market benchmark.

Big shipbuilder

Yangzijiang Shipbuilding Holdings Ltd (SGX: BS6) is one of the biggest private shipbuilding companies in China. It went public in 2007, becoming the first Chinese shipbuilding company to be listed in Singapore.

From 2014 to 2018, Yangzijiang’s revenue grew 10.9% yearly from RMB 15.35 billion to RMB 23.24 billion. However, net profit didn’t grow as much, going up just 0.9% each year, from RMB 3.48 billion to RMB 3.61 billion. During the same period, dividend per share fell from 5.5 Singapore cents to 5.0 Singapore cents. Yangzijiang’s five-year track record is a mixed bag.

Looking ahead, Ren Yuanlin, Yangzijiang’s executive chairman, said the following in the company’s 2019 first-quarter earnings release:

“Yangzijiang’s strong financial performance has its roots in our drive for excellence and efficiency, in both our operations and the vessels we build. While the market has its ups and downs, our commitment to designing and delivering the best-quality and cost-effective vessels is constant. As a resilient entity that consistently outperformed in unstable market conditions, our next step is to elevate our product portfolio to include more high-tech, green vessels especially in the LNG carrier space, catering to the evolving, long-term demand in the market.”

At Yangzijiang’s current share price of S$1.45, it has a market capitalisation of S$5.72 billion, a P/E ratio of around 8, and a dividend yield of 3.4%.

Big property developer

Yanlord Land Group Limited (SGX: Z25) is a real estate developer that focuses on developing high-end residential, commercial, and integrated properties in China.

Over the last five years, Yanlord’s revenue climbed 20.7% annually from RMB 11.74 billion to RMB 24.89 billion. With that, net profit stepped up from RMB 1.37 billion to RMB 3.55 billion, surging 26.9% on an annualised basis. Source: Yanlord 2018 annual report

Meanwhile, net asset value (NAV) per share grew 7.1% yearly from RMB 9.84 in 2014 to RMB 12.96 in 2018. Dividend per share increased from 1.3 Singapore cents to 6.8 Singapore cents, ballooning 51.2% on an annualised basis. Unlike Yangzijiang, Yanlord has rewarded shareholders well with strong dividend growth.

Regarding Yanlord’s future prospects, Zhong Sheng Jian, Yanlord’s chairman and chief executive, commented in the 2019 first-quarter earnings release:

“While near-term volatilities may arise due to the introduction of austerity measures on the PRC real estate sector, we remain confident about the long-term development of the sector. Consistent with our revenue recognition method and delivery schedule, profit for the year was impacted for 1Q 2019 due to the product-mix and lower GFA of delivered units. To better manage changes and uncertainties arising from austerity measures introduced, we strategically managed our launch schedules and inventory levels to better capture market opportunities to enhance returns. Capitalising on our track record and comparative advantages in the development of quality projects, sizable landbank in prime locations within high-growth cities of the PRC coupled with our healthy financial position, we are well poised to tap on the long-term growth prospects of the PRC real estate sector.”

At Yanlord’s current share price of S$1.24, it has a market capitalisation of S$2.42 billion, a P/B ratio of 0.5, and a dividend yield of 5.5%.

Big jet fuel supplier

China Aviation Oil (Singapore) Corp Ltd (SGX: G92) (CAO) is the largest physical jet fuel trader in the Asia-Pacific region and the main supplier of imported jet fuel to airlines in China. The company is also involved in the trading of jet fuel and other oil products.

The following shows CAO’s revenue and net profit trend from 2014 to 2018:

Source: China Aviation Oil 2018 annual report

Over the last five years, on an annualised basis, revenue grew 4.8% while net profit rose 17.5%. With the growth in earnings, dividend per share grew 22.5% annually, from 2.0 Singapore cents to 4.5 Singapore cents. CAO has a dividend policy of paying out 30% of its net profit attributable to shareholders as a dividend.

In the company’s 2019 first-quarter earnings release, Wang Yanjun, chief executive of CAO, said:

“CAO delivered a resilient first quarter performance amidst intensified oil market volatilities. This is a strong testament to CAO’s diversification strategy and competitive advantages of having an integrated global supply and trading platform. Looking ahead, while we remain cognisant of challenges of slower global economic growth and geopolitical tensions, we foresee good growth opportunities in the global aviation sector and China’s development strategy of “One Belt, One Road, which bodes well for the Group. With the firm support of our parent company, China National Aviation Fuel Group Limited, we will leverage on our core competencies in the global jet fuel market and harness our global network and integrated supply chain to seize any opportunities and ensure the steady and sustainable growth and development of our business.”

At CAO’s current share price of S$1.32, it has a market capitalisation of S$1.14 billion, a P/E ratio of around 9, and a dividend yield of 3.4%.

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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