Sheng Siong Group Ltd (SGX: OV8) is one of the largest supermarket chains in Singapore. The company’s network of 43 stores are primarily located in the heartlands of the island. The company was established in 1985 and listed in 2011.
Right now, Sheng Siong’s shares are exchanging hands at S$0.925 each. This price is a whisker away from a 52-week low of S$0.895. Investors may thus be wondering: Is Sheng Siong a bargain stock now?
Unfortunately, there is no easy answer. But, we can still get some insight by comparing Sheng Siong’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).
Sheng Siong currently has a PB ratio of 5.5, which is significantly higher than the SPDR STI ETF’s PB ratio of 1.3. This makes Sheng Siong way more expensive than the market based on the PB ratio. The picture is similar with the PE ratio: Sheng Siong and the SPDR STI ETF have PE ratios of 20.3 and 11.0, respectively. On the other hand, Sheng Siong has a higher dividend yield compared to the market (3.7% vs. 2.9%). The lower a stock’s yield is, the higher its valuation.
Given what we’ve seen, we can conclude reasonably that Sheng Siong is unlikely a bargain right now, given its higher PB ratio and PE ratio in relation to the market.
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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.