CapitaLand Limited (SGX: C31) is a real estate development company focused on investment holding. The Company and its subsidiaries are principally engaged in investment holding, real estate development, investment in real estate financial products and real estate assets, investment advisory and management services, as well as the management of serviced residences.
CapitaLand Limited is one of the largest undervalued stock company in the Singapore stock market with market cap 13.113 B Its diversified global real estate portfolio includes integrated developments, shopping malls, serviced residences, offices, and homes.
CapitaLand’s shares are just 7 cents higher than the 52-week low price of S$2.98 at the current price of S$3.05. This recent move in the stock raises a important question: Is CapitaLand cheap now? This question is really worth according to the investor's point of view because if the firm’s shares are cheap, it might be a good opportunity for investors.
The answer is not easy. But, Multi Management Future Solutions figure some insight by comparing CapitaLand’s current valuations with that of the market by focusing on are the price-to-book (PB) ratio, price-to-earnings (PE) ratio, and dividend yield.
Here we are 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.
The PB ratio of CapitaLand is 0.7, which is lower than the SPDR STI ETF’s PB ratio of 1.1. In addition, its PE ratio is lower than that of the SPDR STI ETF’s (9.2 vs 10.7).
Similarly, the property outfit’s dividend yield of CapitaLand is 3.9% is higher than the market’s yield of 3.6%. The higher a stock’s yield is, the lower is its valuation.
Hence, due to the market average due to its low PB ratio, low PE ratio, and high dividend yield, we can argue that CapitaLand is priced at a discount to the market average.
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