TL;DR Sing Holdings has strong financials at a fairly attractive valuation. I do think this company is worth looking at even further. One concern, however, is the high reinvestment rate and long gestation period common for property developers.
Business Profile
Source: Singapore Property Inc
Sing Holdings is a property development and investment group which has an established track record of development experiences in landed houses, condominiums, and commercial and industrial buildings. Some of the Group’s past residential projects include Robin Residences at Robin Drive, Waterwoods in Punggol and The Laurels at Cairnhill Road and BizTech Centre at Aljunied Road. They have also received various awards.
Source: Park Botanica
Income Statement
For 2018 itself, the firm had very good profitability margins. These margins have also improved over time, which means that the firm had become more profitable. Overall, the earnings and revenue of the firm all experienced good increases over the last few years. The overall health of the income statement is thus very good.
Balance Sheet
The firm's short-term liquidity is also very high. This is a very positive sign as well. We can also see that short-term liquidity has been very high for the last few years too. However, operating cash flow to debt ratio is considered probably neutral due to the high debt levels that the company holds.
In general, the firm's debt profile looks fairly healthy as well. This is because of the high earnings of the firm as well as the high current assets. Net Debt/EBITDA seems to be on the low end, however. This is probably due to the significantly low earnings compared to Debt.
The overall health of the balance sheet is still considered good.
Free Cashflow Analysis
For 2018, the firm's free cash flow looks pretty good, generating a high free cash flow margin of 90%. This is mainly due to the decrease in fixed assets as well as decreases in net working capital, which generated free cash flows. Additionally, the NOPAT margin is quite high too, which means that the firm is quite good at generating earnings. There was a big improvement in 2016
Free Cashflow to Equity was still negative however, due to debt needing to be paid off. FCFE had improved quite a bit from the previous year though.
The firm had a dividend payout ratio of 0.29 in 2018, which is quite low. Still, FCFE was negative which means that more cash was consumed than given out in 2018. This also means that the dividends paid out were from cash savings, and not from the cash flow generated by the firm.
Efficiency
The firm seems to be fairly inefficient in its use of assets. This could be due to the huge amount of resources that the firm has taken on over time, that have not started to generate any earnings yet. One of the reasons why ROE is low is due to the low asset turnover ratio, despite high net profit margins and high asset/equity ratio. The firm's efficiency seems to have dipped since 2016 but had improved from 2017's figures.
Valuation
It seems that the shares of the firm could be undervalued. This is due to the low valuation multiples that are supported by strong companion variables as well. The EV multiples of the firm seem higher, mostly due to the high debt levels that the firm possesses.
However, the EV / Capital, EV / Operating Assets and P/B seem to be low. This is quite an interesting sign, which seems to point that the market may be undervaluing the shares when we compare it to their resources. This could also point towards the real value of the assets being much lower than their book values.
Cost of Capital
The WACC is a low figure of 3.23%, mostly due to the high debt levels that the firm has which results in the interest tax shield. The reason for the low WACC is also due to the low default spread awarded due to a good interest coverage ratio of 3.15. Moreover, the firm's beta is on the low end too. All in all, the ROIC exceeds the WACC by almost 200 basis points, which does show that value is being created based on investor's capital. I would expect that ROIC to increase over time, as the firm's resources create more value in the long run.
TL;DR Sing Holdings has strong financials at a fairly attractive valuation. I do think this company is worth looking at even further. One concern, however, is the high reinvestment rate and long gestation period common for property developers.
Business Profile
Source: Singapore Property Inc
Sing Holdings is a property development and investment group which has an established track record of development experiences in landed houses, condominiums, and commercial and industrial buildings. Some of the Group’s past residential projects include Robin Residences at Robin Drive, Waterwoods in Punggol and The Laurels at Cairnhill Road and BizTech Centre at Aljunied Road. They have also received various awards.
Source: Park Botanica
Income Statement
For 2018 itself, the firm had very good profitability margins. These margins have also improved over time, which means that the firm had become more profitable. Overall, the earnings and revenue of the firm all experienced good increases over the last few years. The overall health of the income statement is thus very good.
Balance Sheet
The firm's short-term liquidity is also very high. This is a very positive sign as well. We can also see that short-term liquidity has been very high for the last few years too. However, operating cash flow to debt ratio is considered probably neutral due to the high debt levels that the company holds.
In general, the firm's debt profile looks fairly healthy as well. This is because of the high earnings of the firm as well as the high current assets. Net Debt/EBITDA seems to be on the low end, however. This is probably due to the significantly low earnings compared to Debt.
The overall health of the balance sheet is still considered good.
Free Cashflow Analysis
For 2018, the firm's free cash flow looks pretty good, generating a high free cash flow margin of 90%. This is mainly due to the decrease in fixed assets as well as decreases in net working capital, which generated free cash flows. Additionally, the NOPAT margin is quite high too, which means that the firm is quite good at generating earnings. There was a big improvement in 2016
Free Cashflow to Equity was still negative however, due to debt needing to be paid off. FCFE had improved quite a bit from the previous year though.
The firm had a dividend payout ratio of 0.29 in 2018, which is quite low. Still, FCFE was negative which means that more cash was consumed than given out in 2018. This also means that the dividends paid out were from cash savings, and not from the cash flow generated by the firm.
Efficiency
The firm seems to be fairly inefficient in its use of assets. This could be due to the huge amount of resources that the firm has taken on over time, that have not started to generate any earnings yet. One of the reasons why ROE is low is due to the low asset turnover ratio, despite high net profit margins and high asset/equity ratio. The firm's efficiency seems to have dipped since 2016 but had improved from 2017's figures.
Valuation
It seems that the shares of the firm could be undervalued. This is due to the low valuation multiples that are supported by strong companion variables as well. The EV multiples of the firm seem higher, mostly due to the high debt levels that the firm possesses.
However, the EV / Capital, EV / Operating Assets and P/B seem to be low. This is quite an interesting sign, which seems to point that the market may be undervaluing the shares when we compare it to their resources. This could also point towards the real value of the assets being much lower than their book values.
Cost of Capital
The WACC is a low figure of 3.23%, mostly due to the high debt levels that the firm has which results in the interest tax shield. The reason for the low WACC is also due to the low default spread awarded due to a good interest coverage ratio of 3.15. Moreover, the firm's beta is on the low end too. All in all, the ROIC exceeds the WACC by almost 200 basis points, which does show that value is being created based on investor's capital. I would expect that ROIC to increase over time, as the firm's resources create more value in the long run.