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Straco Corporation Ltd’s Stock Is Near A 52-Week Low Now: Is It A Bargain?

Lawrence Nga

Straco Corporation Ltd (SGX: S85) is a tourism asset owner and operator with assets in China and Singapore.

In China, the company has the Shanghai Ocean Aquarium, Underwater World Xiamen, and Lintong Lixing Cable Car attractions under its umbrella. In Singapore, Straco bought a majority stake in the iconic Singapore Flyer – one of the largest observation wheels in the world – in late 2014.

Straco’s current stock price of S$0.775 is just a sliver higher than a 52-week low of S$0.76. This may raise a question among investors: Is Straco a bargain now?

Unfortunately, there is no easy answer. But, we can still get some insight by comparing First Resources’ 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).

Straco currently has a PB ratio of 2.50 times, which is significantly higher than the SPDR STI ETF’s PB ratio of 1.25. Similarly, Straco’ PE ratio is higher than the market’s (14.0 vs 11.6). On the other hand, Straco has a higher dividend yield of 3.2% compared to the market’s yield of 2.9%. The higher a stock’s yield is, the lower is its valuation.

Putting it all together, we can argue that Straco is trading at a premium to the market average given 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. The Motley Fool Singapore contributor Lawrence Nga doesn't own shares in any companies mentioned. The Motley Fool Singapore has a recommendation for Straco Corporation.