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No Signboard Holdings Ltd Is Down By 16% From Its IPO Price: Is It A Bargain Now?

Lawrence Nga

Food & beverage retailer No Signboard Holdings Ltd (SGX: 1G6) is a new company in Singapore’s stock market given that its initial public offering (IPO) was held less than two months ago in late November 2017. But, the company has been in business for 37 years.

No Signboard has three business segments: Restaurant (which houses the company’s No Signboard Seafood chain of seafood restaurants); Beer (which distributes the company’s own Draft Denmark brand of beer); and Ready Meal (a distributor of ready meals under the Powered by No Signboard brand).

Currently, No Signboard’s stock price is S$0.235, which is down 16% from its listing price of S$0.28. The sharp decline may cause investors to wonder: Is No Signboard a bargain now?

Unfortunately, there is no easy answer. But, we can still get some insight by comparing No Signboard’s current valuations with the market’s. 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).

No Signboard currently has a high PB ratio of 6.4 times. In contrast, the SPDR STI ETF’s PB ratio is just 1.35. The situation with the PE ratio is also similar, but not as drastic. No Signboard has a PE ratio of 14 right now, which is 22% higher than the SPDR STI ETF’s earnings multiple of 11.5. As for the dividend yield, there’s no comparison to be made because No Signboard has yet to pay a dividend.

Putting it all together, we can thus argue that No Signboard is pricier than the market,based on its higher PB and PE ratios.

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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.