Yeo Hiap Seng Ltd (SGX: Y03) is a food & beverage manufacturer. Some of its popular beverage brands are Yeo’s, H-TWO-O, and Pink Dolphin.
Over the last 12 months, Yeo Hiap Seng has seen its stock price decline by 15% to S$1.20 currently. This may raise a question among investors: Is Yeo Hiap Seng a bargain now?
Unfortunately, there is no easy answer. But, we can still get some insight by comparing Yeo Hiap Seng’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).
Yeo Hiap Seng currently has a PB ratio of 1.09, which is lower than the SPDR STI ETF’s PB ratio of 1.3. In addition, Yeo Hiap Seng’s PE ratio is significantly lower than that of the SPDR STI ETF’s (3.8 vs 11.4).
Coming to the dividend yield, this is where Yeo Hiap Seng loses its lustre. The company has a yield of 1.6% compared to the market’s yield of 2.9%. The lower a stock’s yield is, the higher is its valuation.
Putting all together, we can argue that Yeo Hiap Seng is probably trading at a marginal discount to the market. The company has lower PB and PE ratios, but a lower dividend yield.
But, investors may also want to note that Yeo Hiap Seng’s earnings per share numbers are inflated by one-time gains from the sale of investments and certain assets. All-told, in the 12 months ended 30 September 2017, the company logged net income of S$156.4 million, and one-time gains of S$163.1 million.
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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.