5 Companies with Price to Book Ratio Below 0.5 times for the Past 3 Years

For starters, Price to Book Ratio (“P/B ratio”) is a commonly used financial ratio that measures the market's valuation of a company as compared to its book value.

The formula to derive Price to Book Ratio is as follows:

(Average Share Price/ Net Asset Value Per Share)

Traditionally, a P/B ratio of below 1.0 time is considered an acceptable valuation for value investors, indicating a potentially undervalued stock. This is because the company is trading at a market capitalization below what all its assets are actually worth.

On this note, there are instances where some companies are trading with even lower P/B ratios of less than 0.5 times.

Here are 5 such Singapore companies that could warrant a look:

• Metro Holdings Limited (SGX: M01)

• Lian Beng Group Limited (SGX: L03)

• Indofood Agri Resources Limited (SGX: 5JS)

• GuocoLand Limited (SGX: F17)

• Tuan Sing Holdings Limited (SGX: T24)

Note: Data accurate as of 29 March 2021

1) Metro Holdings Limited (SGX: M01)

Metro Holdings Limited (“Metro Holdings”) listed on the Main Board of SGX-ST in 1973. Over the years, Metro has grown to become a property and retail group with investments and operations in the region.

Currently, the Group operates two core business segments – property investment and development, and retail – and focuses on key markets in Singapore, China, Indonesia, the UK and Australia.

For the past 3 financial years, Metro Holdings’ P/B ratio stood around 0.40 and 0.41 times. Majority of its net asset value is being contributed from the investment properties in its balance sheet. Some of these investment properties include retail and office buildings in China and Singapore.

Metro Holdings’ share price is last traded at S$0.78, with a market capitalization of S$645.86 million.

2) Lian Beng Group Limited (SGX: L03)

Established in 1973, Lian Beng Group Limited (“Lian Beng”) is one of Singapore's major home-grown construction group with integrated civil engineering and construction support service capabilities. The Group is principally involved in the construction of residential, industrial and commercial projects, and civil engineering projects as the main contractor.

For the past 3 financial years, Lian Beng’s P/B ratio stood between 0.33 and 0.36 times. Like Metro Holdings, the majority of Lian Beng’s net asset value is derived from its investment properties. Currently, its portfolio of investment properties includes dormitory, commercial, retail and residential.

Lian Beng’s share price is last traded at S$0.51, with a market capitalization of S$254.84 million.

3) Indofood Agri Resources Limited (SGX: 5JS)

Indofood Agri Resource Limited (“Indofood Agri”) is an agribusiness company engaged in activities, including research and development, oil palm seed breeding, cultivation of oil palm plantations, production and refining of crude palm oil (“CPO”), cultivation of rubber, sugar cane and industrial timber plantations and marketing and selling these end products.

It is also involved in managing and cultivating small portions of cocoa, coconut and tea plantations, and marketing and selling the related products.

For the past 3 financial years, Indofood Agri’s P/B ratio fluctuates between 0.38 and 0.40 times. As the company is in the agriculture business, the majority of its net asset value is derived from its inventories, which are being held for sale.

Furthermore, its property, plant and equipment also help contribute to the overall value of the company.

Indofood Agri’s share price is last traded at S$0.30, with a market capitalization of S$418.77 million.

4) GuocoLand Limited (SGX: F17)

GuocoLand Limited ("GuocoLand") is a public company listed on the Singapore Exchange since 1978. The principal business activities of its subsidiaries are property development, property investment, hotel operations and property management.

GuocoLand and its subsidiaries have established property operations in their geographical markets of Singapore, China and Malaysia, comprising residential, hospitality, commercial and retail developments.

For the past 3 financial years, GuocoLand’s P/B ratio is hovering around 0.48 times. Majority of the Group’s net asset value derives from Investment properties and Inventories and deposits for land. Some of these investment properties include Guoco Tower and 20 Collyer Quay.

GuocoLand’s share price is last traded at S$1.71, with a market capitalization of S$1.89 billion.

5) Tuan Sing Holdings Limited (SGX: T24)

Tuan Sing Holdings Limited (“Tuan Sing”) is a diversified regional investment holding company with interests mainly in property development, property investment and hotel ownership. Over the years, the Group has developed a portfolio of strategically located real estate assets in Singapore and across the region.

For the past 3 financial years, Tuan Sing’s P/B ratio varies between 0.37 and 0.40 times. The majority of the Group’s net asset value was contributed from its investment properties such as 18 Robinson and Sime Darby Centre.

On top of that, the Group’s 80.2% stake in SGX-ST listed subsidiary, SP Corporation Limited which is primarily engaged in commodities trading, also contributed to the net asset value.

Tuan Sing’s share price is last traded at S$0.37, with a market capitalization of S$439.32 million.

Conclusion

To conclude, P/B ratio is one simple to use metric to help investors understand whether the market price of a company is undervalued compared to its book value per share.

However, one potential problem in using the P/B ratio would be some scenarios such as recent acquisitions, recent write-offs, or share buybacks can distort the book value for the respective companies.

Therefore, investors should consider different valuation measures to complement the P/B ratio.

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