The Motley Fool

DBS Group Holdings Ltd Is Down By 19% From Its Peak: Is It Cheap Now?

DBS Group Holdings Ltd (SGX: D05), or DBS in short, is one of the three major banks based in Singapore.

At the current price of S$25.43 (at the time of writing), DBS Group’s shares are down by 19% from its intraday peak of S$31.28 from early May this year. This raises a question: Is DBS Group cheap now? This question is important because if the bank’s shares are cheap, it might be a good opportunity for investors.

Unfortunately, there is no easy answer. However, we can still get some insights by comparing DBS’ current valuations with the market’s valuation. The three valuation metrics I will focus on are the price-to-book (PB) ratio, price-to-earnings (PE) ratio, and dividend yield.

I will be using the SPDR STI ETF (SGX: ES3) as a proxy for the market; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).

DBS currently has a PB ratio of 1.4 times, which is higher than the SPDR STI ETF’s PB ratio of 1.1. Moreover, DBS’ PE ratio is higher than that of the SPDR STI ETF’s (13.7 vs 11.1).

On the other hand, DBS has a higher dividend yield of 4.7% as compared to the market’s yield of 3.4%.

Putting everything together, we can argue that DBS is probably trading at a slight premium to the market average mainly due to its high PB and PE ratios, partially offset by its high dividend yield.


