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QuestionsCategory: Valuation QuadrantValuation of Singtel
KH asked 3 years ago

Hi Victor & Rusmin,
Currently i trying to perform the some simple valuation of Singtel, appreciate your thought & advice for below questions:

  1. Is P/E ratio the appropriate valuation tool for Singtel business?
  2. I tabulated the PE ratio from 2009 to current and get a average PE of 14.8. Based on current 2017 EPS of 0.2396, if if i take a conservative outlook of 2018 EPS is 5% lesser than 2017 EPS which work out to be 0.2276. So can i assume that the “actual value” of Singtel should be 0.2276 x 14.8 = $3.36?
  3. And based on $3.36, the safety margin should be around 7.5% based on current price of ~$3.11. Is this correct? 
1 Answers
Victor Chng answered 3 years ago

Hi KH,
You can used PE and dividend yield for Singtel.
Your valuation method is valid just that you need to make sure that you have enough margin to buffer because their earning may continue to decrease. Do take into account of the dividend yield for your valuation.