Return on Equity (ROE) is an important indicator for investors. It tells investors how much the company is earning (profits) for the shareholders. It is net profits attributable to shareholders divided by shareholders’ funds calculated as a percentage term.
The higher the ROE, the better for the shareholders. Because it is calculated as percentage term, we can compare one ROE with another ROE of another company.
From the annual reports of some companies, the following data were extracted.
| ROE of (in % term) | 2015 | 2014 | Change | Remarks |
| M1 | 44.2 | 44.5 | -0.3 | Y/E 31 Dec |
| Singtel | 15.6 | 15.3 | 0.3 | Y/E 31 Mar |
| Keppel Corp | 14.2 | 18.8 | -4.6 | Y/E 31 Dec |
| Comfort Delgro | 13.3 | 13.1 | 0.2 | Y/E 31 Dec |
| OCBC | 12.3 | 14.8 | -2.5 | Y/E 31 Dec |
| DBS | 11.2 | 10.9 | 0.3 | Y/E 31 Dec |
| UOB | 11.0 | 12.3 | -1.3 | Y/E 31 Dec |
| SembCorp Ind | 9.4 | 15.2 | -5.8 | Y/E 31 Dec |
| SPH | 8.9 | 11.0 | -2.1 | Y/E 31 Aug |
| Hyflux | 3.2 | 4.3 | -1.1 | Y/E 31 Dec |
| SembCorp Marine | -10.6 | 19.9 | -30.4 | Y/E 31 Dec |
SembCorp Marine has a negative ROE in 2015 because it had an overall loss in operation for 2015.
Comparing 2015 with 2014, most companies showed lower ROE. Singtel, Comfort Delgro and DBS showed slight improvements in ROE. 2015 was a tough year for making good profits.
Net Assets Value per unit
The net asset values (NAV) of the following as at the date indicated were listed below.
| Counter | NAV | Current price | P/B | Remark |
| Keppel Reit | $1.42 | $1.045 | 0.735 | As at 31 Dec 2015 |
| SPH Reit | $0.95 | $0.95 | 1.000 | As at 31 Aug 2015 |
| STI ETF | $2.933 | $2.91 | 0.992 | As at 31 Dec 2015 |
Note: P/B = Price to Book ratio
Based on current prices (26 April 2016), Keppel Reit was trading below NAV at 0.735 times. STI ETF was trading at 0.992 times NAV. SPH Reit was trading at its NAV.
Disclaimer: The author disclaimed liabilities on use of this post by readers for investment decisions. Use them with caution.
Copyright © 2016, limkimtong for Living Investment
The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.
