The GDP in Singapore is driven by private consumption and investment. Singapore is one of the poorest performing markets in Asia. Earnings fell in 2015 and are expected to develop poorly. Singapore is cheap on PB in line with a relatively low ROE.
Learn more at: http://becomeabetterinvestor.net/blog/country-profile-singapore-cheap-valuation-but-for-a-reason/
Country Profile: Singapore – Cheap Valuation, but For A Reason
1. Presented by: Andrew Stotz, CFA 29 June 2016
Singapore: Cheap valuation,
but for a reason
2. 6 May 201629 June 2016 2
Year End Dec 14 15 16CE* 17CE* 18CE*
PE (x) 11.0 11.9 12.1 11.6 11.0
EPS growth (%) 9.3 (4.2) (1.8) 4.9 5.3
PBV (x) 1.1 1.1 1.1 1.0 1.0
ROE (%) 9.8 9.1 8.7 8.8 8.9
Dividend yield (%) 4.6 4.2 4.3 4.4 4.6
Four Pillars of GDP: Driven by private consumption and investments
Sources: A. Stotz Investment Research, CIA World Factbook, FactSet, Thomson Reuters, World Bank
Note: *Consensus estimates **in current US$
A. Stotz Four Elements (4Es) rank relative to Asia Sector performance
Singapore: Cheap valuation, but for a reason
80
90
100
110
120
80
90
100
110
120
Jun-13 Mar-14 Dec-14 Sep-15 Jun-16
MSCI Singapore (LHS)
Asia ex-Japan rel performance
Index, rebased to 100 (%)
- 1 2 3 4 5 6 7 8 9 10
Risk
Momentum
Overall
Fundamentals
Valuation
Worst Decile ranking Best
1.42
0.65
1.07
(1.34)
1.81
(2.0) - 2.0 4.0
GDP growth - last 4Qs
Net exports (-4.6 x 29%)
Investment (4.1 x 26%)
Gov't cons (7.2 x 9%)
Private cons (4.0 x 35%)
(% chg YoY)
(Chg YoY x % of GDP)
Country information:
Republic of Singapore
Prime Minister: Hsien Loong
Lee
Population: 5m
2014 GDP**: US$308bn
GDP/capita**: US$56,284
Equity market:
Main index: STI index
Market cap: US$526bn
Market size/GDP: 171%
Market volume: US$0.8bn
ETF BB code: EWS US
Listed companies: 722
5 3
2 2
(1) (2) (4) (4) (4)
(8)
(1.9)
(10)
(5)
-
5
10
Sector MarketPrice chg (%, 3mth)
3. 6 May 201629 June 2016 3
Sources: A. Stotz Investment Research, Thomson Reuters
Overall: Slow growth
Drivers: Strong private
consumption and
investments
Laggard: Exports had a
large contracting impact
Four Pillars of GDP: Driven by private consumption and investments
1.42
0.65
1.07
(1.34)
1.81
(2.0) (1.0) - 1.0 2.0 3.0 4.0
GDP growth - last 4Qs
Net exports (-4.6 x 29%)
Investment (4.1 x 26%)
Gov't cons (7.2 x 9%)
Private cons (4.0 x 35%)
(% chg YoY)
(Chg YoY x % of GDP)
4. 6 May 201629 June 2016 4
Year End Dec 14 15 16CE* 17CE* 18CE*
PE (x) 11.0 11.9 12.1 11.6 11.0
EPS growth (%) 9.3 (4.2) (1.8) 4.9 5.3
PBV (x) 1.1 1.1 1.1 1.0 1.0
ROE (%) 9.8 9.1 8.7 8.8 8.9
Dividend yield (%) 4.6 4.2 4.3 4.4 4.6
Four Pillars of GDP: Driven by private consumption and investments
Sources: A. Stotz Investment Research, CIA World Factbook, FactSet, Thomson Reuters, World Bank
Note: *Consensus estimates **in current US$
A. Stotz Four Elements (4Es) rank relative to Asia Sector performance
Singapore: Cheap valuation, but for a reason
80
90
100
110
120
80
90
100
110
120
Jun-13 Mar-14 Dec-14 Sep-15 Jun-16
MSCI Singapore (LHS)
Asia ex-Japan rel performance
Index, rebased to 100 (%)
- 1 2 3 4 5 6 7 8 9 10
Risk
Momentum
Overall
Fundamentals
Valuation
Worst Decile ranking Best
1.42
0.65
1.07
(1.34)
1.81
(2.0) - 2.0 4.0
GDP growth - last 4Qs
Net exports (-4.6 x 29%)
Investment (4.1 x 26%)
Gov't cons (7.2 x 9%)
Private cons (4.0 x 35%)
(% chg YoY)
(Chg YoY x % of GDP)
Country information:
Republic of Singapore
Prime Minister: Hsien Loong
Lee
Population: 5m
2014 GDP**: US$308bn
GDP/capita**: US$56,284
Equity market:
Main index: STI index
Market cap: US$526bn
Market size/GDP: 171%
Market volume: US$0.8bn
ETF BB code: EWS US
Listed companies: 722
5 3
2 2
(1) (2) (4) (4) (4)
(8)
(1.9)
(10)
(5)
-
5
10
Sector MarketPrice chg (%, 3mth)
5. 6 May 201629 June 2016 5
Sources: A. Stotz Investment Research, CIA World Factbook, FactSet, Thomson Reuters, World Bank
Note: *Consensus estimates **in current US$
One of the poorest
performing markets in Asia
Earnings fell in 2015 and
are expected to develop
poorly
Cheap on PB in line with
a relatively low ROE
Among the highest
dividend yield in Asia
Singapore: Cheap valuation and high dividend yield
Country information:
Republic of Singapore
Prime Minister: Hsien
Loong Lee
Population: 5m
2014 GDP**: US$308bn
GDP/capita**: US$56,284
Equity market:
Main index: STI index
Market cap: US$526bn
Market size/GDP: 171%
Market volume: US$0.8bn
ETF BB code: EWS US
Listed companies: 722
Year end Dec 14 15 16CE* 17CE* 18CE*
PE (x) 11.0 11.9 12.1 11.6 11.0
EPS growth (%) 9.3 (4.2) (1.8) 4.9 5.3
PBV (x) 1.1 1.1 1.1 1.0 1.0
ROE (%) 9.8 9.1 8.7 8.8 8.9
Dividend yield (%) 4.6 4.2 4.3 4.4 4.6
80
90
100
110
120
80
90
100
110
120
Jun-13 Mar-14 Dec-14 Sep-15 Jun-16
MSCI Singapore (LHS)
Asia ex-Japan rel performance
Index, rebased to 100 (%)
6. 6 May 201629 June 2016 6
Year End Dec 14 15 16CE* 17CE* 18CE*
PE (x) 11.0 11.9 12.1 11.6 11.0
EPS growth (%) 9.3 (4.2) (1.8) 4.9 5.3
PBV (x) 1.1 1.1 1.1 1.0 1.0
ROE (%) 9.8 9.1 8.7 8.8 8.9
Dividend yield (%) 4.6 4.2 4.3 4.4 4.6
Four Pillars of GDP: Driven by private consumption and investments
Sources: A. Stotz Investment Research, CIA World Factbook, FactSet, Thomson Reuters, World Bank
Note: *Consensus estimates **in current US$
A. Stotz Four Elements (4Es) rank relative to Asia Sector performance
Singapore: Cheap valuation, but for a reason
80
90
100
110
120
80
90
100
110
120
Jun-13 Mar-14 Dec-14 Sep-15 Jun-16
MSCI Singapore (LHS)
Asia ex-Japan rel performance
Index, rebased to 100 (%)
- 1 2 3 4 5 6 7 8 9 10
Risk
Momentum
Overall
Fundamentals
Valuation
Worst Decile ranking Best
1.42
0.65
1.07
(1.34)
1.81
(2.0) - 2.0 4.0
GDP growth - last 4Qs
Net exports (-4.6 x 29%)
Investment (4.1 x 26%)
Gov't cons (7.2 x 9%)
Private cons (4.0 x 35%)
(% chg YoY)
(Chg YoY x % of GDP)
Country information:
Republic of Singapore
Prime Minister: Hsien Loong
Lee
Population: 5m
2014 GDP**: US$308bn
GDP/capita**: US$56,284
Equity market:
Main index: STI index
Market cap: US$526bn
Market size/GDP: 171%
Market volume: US$0.8bn
ETF BB code: EWS US
Listed companies: 722
5 3
2 2
(1) (2) (4) (4) (4)
(8)
(1.9)
(10)
(5)
-
5
10
Sector MarketPrice chg (%, 3mth)
7. 6 May 201629 June 2016 7
Sources: A. Stotz Investment Research, Thomson Reuters
Overall: Poor
Fundamentals: Poor ROE
below 10%
Valuation: Attractive low
multiples and a high
dividend yield
Momentum: Poor price
and earnings momentum
Risk: Moderate due to
low volatility
A. Stotz Four Elements (4Es) rank relative to Asia
- 1 2 3 4 5 6 7 8 9 10
Risk
Momentum
Overall
Fundamentals
Valuation
Worst Decile ranking Best
8. 6 May 201629 June 2016 8
Year End Dec 14 15 16CE* 17CE* 18CE*
PE (x) 11.0 11.9 12.1 11.6 11.0
EPS growth (%) 9.3 (4.2) (1.8) 4.9 5.3
PBV (x) 1.1 1.1 1.1 1.0 1.0
ROE (%) 9.8 9.1 8.7 8.8 8.9
Dividend yield (%) 4.6 4.2 4.3 4.4 4.6
Four Pillars of GDP: Driven by private consumption and investments
Sources: A. Stotz Investment Research, CIA World Factbook, FactSet, Thomson Reuters, World Bank
Note: *Consensus estimates **in current US$
A. Stotz Four Elements (4Es) rank relative to Asia Sector performance
Singapore: Cheap valuation, but for a reason
80
90
100
110
120
80
90
100
110
120
Jun-13 Mar-14 Dec-14 Sep-15 Jun-16
MSCI Singapore (LHS)
Asia ex-Japan rel performance
Index, rebased to 100 (%)
- 1 2 3 4 5 6 7 8 9 10
Risk
Momentum
Overall
Fundamentals
Valuation
Worst Decile ranking Best
1.42
0.65
1.07
(1.34)
1.81
(2.0) - 2.0 4.0
GDP growth - last 4Qs
Net exports (-4.6 x 29%)
Investment (4.1 x 26%)
Gov't cons (7.2 x 9%)
Private cons (4.0 x 35%)
(% chg YoY)
(Chg YoY x % of GDP)
Country information:
Republic of Singapore
Prime Minister: Hsien Loong
Lee
Population: 5m
2014 GDP**: US$308bn
GDP/capita**: US$56,284
Equity market:
Main index: STI index
Market cap: US$526bn
Market size/GDP: 171%
Market volume: US$0.8bn
ETF BB code: EWS US
Listed companies: 722
5 3
2 2
(1) (2) (4) (4) (4)
(8)
(1.9)
(10)
(5)
-
5
10
Sector MarketPrice chg (%, 3mth)
9. 6 May 201629 June 2016 9
Sources: A. Stotz Investment Research, Thomson Reuters
Top 3 largest sectors:
Industrials 27% of market,
Real Estate 21%, Financials
18%
Best sector & stock:
Cons. Staples +4.9%,
Thai Beverage PCL +22.3%
Worst sector & stock:
Cons. Disc. -7.9%,
Jardine Cycle & Carriage
Ltd -18.5%
Singapore: Poor performance by main sectors; Financials and Industrials
5
3
2 2
(1) (2)
(4) (4) (4)
(8)
(1.9)
(10)
(8)
(6)
(4)
(2)
-
2
4
6
Sector MarketPrice chg (%, 3mth)
10. 6 May 201629 June 2016 10
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