Is Sing Investments & Finance Ltd Worth Investing In?

Founded in 1964, Sing Investments & Finance Ltd (SGX: S35) is a financier which has four branches operating across Singapore. They include 96 Robinson Road, Ang Mo Kio Avenue 6, Jurong Gateway Road and Bedok North Street 1. Sing offers a wide range of loans and credit facilities such as car loans, property loans, share financing, block discounting, unsecured business loans and so on and so forth. 

Sing is worth S$ 225.4 million in market capitalisation as of 21 December 2019. In this article, I’ll cover on its latest financial results and valuation figures. Thus, here are 10 things to know about Sing before you invest: 

• Sing’s Biggest Assets
  The biggest asset of Sing is its loans and advances portfolio. For the last six years, Sing’s loans and advances assets have increased by a CAGR of 6.5% from S$ 1.42 billion in 2012 to S$ 2.08 billion in 2018, accounting for 74% of Sing’s total assets in 2018.
  
  
  

Meanwhile, Sing’s second biggest asset would be its statutory deposits with the Monetary Authorities of Singapore (MAS), which has grown by a CAGR of 7.6% from S$ 40.2 million in 2012 to S$ 62.6 million in 2018, accounting for 2% of Sing’s total assets in 2018.

• Total Income
  Sing derives its total income from net interest income and non-interest income. Net interest income is derived from interest earned from yield- earning assets such as loans and advances and statutory deposits with MAS.
  
  Net Interest Income:
  As a result, Sing has achieved a CAGR of 7.7% in net interest income, up from S$ 30.1 million in 2012 to S$ 46.9 million in 2018, thus, is the key source of income as it has accounted for 90.5% of Sing’s total income in 2018.
  
  
  

Non-Interest Income
This includes fee & commission income, rental income from investment properties, and dividend income. They have contributed around S$ 4-5 million in income to Sing per annum.

Combined, Sing has attained a CAGR of 7.2% in total income, increasing from S$ 34.1 million in 2012 to S$ 51.8 million in 2018.

• Profitability
  In 2013, Sing had recorded a decline in earnings to S$ 11.5 million from S$ 14.7 million in 2012. It is due to higher staff costs in that year. Since then, Sing had achieved a CAGR of 16.0% in shareholders’ earnings, up from S$ 11.5 million in 2013 to S$ 24.0 million in 2018.
  
  This is attributable to an increase in net interest income which was due to rising loans & advances and statutory deposits with MAS, a fall in its cost-to-income ratio from 60.1% in 2013 to 47.2% in 2018 and a drop in its net impairment losses incurred during the 5-year period.
  
  Sing’s return on equity (ROE) increased from 3.78% in 2012 to 6.62% in 2018. This means, it has made S$ 6.62 in annual earnings from every S$ 100 it has in shareholders’ equity in 2018.
  
  
  

• Balance Sheet Strength
  Sing has maintained a capital adequacy ratio (CAR) at 15+% a year since 2012, which is above its minimum regulatory requirement by the MAS.
  
  
  

• Latest 12-Month Financial Results
  For the past 12 months, Sing has made S$ 50.7 million in total income. Out of which, it had generated S 21.1 million in shareholders’ earnings or 13.4 cents in earnings per share (EPS).
  
  
  

Period	Group Revenue (S$ ‘000)	Shareholders’ Earnings (S$ ‘000)	Earnings per Share (EPS) (Cents)
Q4 2018	12,933	6,299	4.0
Q1 2019	12,379	4,964	3.1
Q2 2019	12,758	5,053	3.2
Q3 2019	12,678	4,807	3.0
Latest 12-Months	50,748	21,123	13.4

From the graph below, Sing’s quarterly earnings had a slight dip from as high as S$ 5.5-6.0 million per quarter in 2017-2018 to about S$ 4.5-5.0 million per quarter in the past 3 quarters in 2019. The fall in earnings is due to incurring higher interest expenses as a result of higher deposits received and deposit rates and incurring higher staff cost to support its business activities during the period.

• Major Shareholders
  F.H. Lee Holdings (Pte) Limited has 29.58% interest in Sing Investments & Finance Ltd and thus, is the largest shareholder of the company. The Lee Brothers: Lee Sze Leong, Lee Sze Siong and Lee Sze Hao are the key shareholders of Sing through their stakes held in F.H. Lee Holdings (Pte) Limited. Presently, Lee Sze Leong is the Managing Director of Sing while Lee Sze Siong is its Deputy Managing Director.
  
  
  
• P/E Ratio
  As of 21 December 2019, Sing is trading at S$ 1.43 a share. Hence, Sing has a current P/E Ratio of 10.67, below its 7-year average of 14.10.
  
  
  

• P/B Ratio
  In Q3 2019, Sing has net assets of S$ 2.33 per share. Hence, its current P/B Ratio is 0.61, which is below its 7-year average of 0.66.
  
  
  

• Dividend Yields
  In 2018, Sing has paid out 7.0 cents in dividends per share (DPS). Thus, its current dividend yield is 4.90% per annum, which is above its 7-year average of 4.21% per year.
  
  
  

VIA’s Verdict 

So, the question is: ‘Should I invest in Sing at S$ 1.43 a share today, considering that its P/E Ratio and P/B Ratio are below average and it offers 4.9% in dividend yield per annum?’ 

Comparing Value against Banks
First, I think it would be helpful to compare Sing with the three major banks in Singapore: OCBC, DBS, and UOB for they are much larger in many aspects such as asset size, customer base, market reach … etc. 

I discovered that these banks are also trading at similar P/E Ratio of 10 – 12 and are offering 4+% in dividend yields per annum.

Growth Markets:
Second, when these banks’ valuation figures are almost comparable, I would consider their potential for growth. For Sing, they are reliant on the Singapore economy for they operate in Singapore only. Meanwhile, the other banks have exposure to other key growth markets such as Southeast Asia and Greater China. 

Asset Quality & Cost-Efficiency:
Third, based on both asset quality and cost-efficiency, Sing remains marginally  inferior as compared to the three banks for it has 3.7% in non-performing loan (NPL) Ratio and cost-to-income ratio of 47.2% in 2018. In the same period, the three banks had below 2% in NPL and below 45% in cost-to-income ratio. 

After considering the three factors above, you then may decide on whether or not,  you should invest in Sing Investments & Finance today at S$ 1.43 a share. 

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