The Case for Systematic Screening
In a market where the STI has rallied strongly but unevenly, systematic screening becomes essential for value investors. UOB Kay Hian’s September 2026 strategy note, aptly titled “Chasing The Laggards,” screened the 30 STI component stocks for companies with sound fundamentals trading at significant discounts in terms of PE or P/B. The results reveal a clear set of opportunities for investors willing to look beyond the index heavyweights.
The PE Screen: Yangzijiang Shipbuilding
Yangzijiang Shipbuilding emerged as the standout candidate on a PE basis. Its 2026F PE of 9.5x is the lowest among the 30 STI component stocks, with potential to re-rate towards peers’ average 2028F PE of 11.3x. The company’s US$22.4 billion orderbook provides earnings visibility through 2029, with 2029 delivery slots nearly full. Contract pricing remains strong, allowing the company to avoid price competition and largely secure profitability through 2029.
First-half 2026 net profit rose 28% year-on-year to RMB 5.37 billion, while shipbuilding gross profit margin reached 37.1% on higher-priced contracts and favourable vessel mix. The new Hongyuan yard should provide another growth leg, potentially contributing around 20% of group revenue from 2027.
At 9.5x/8.3x 2026F/27F PE with 5.3-6.0% prospective dividend yields and a strong net-cash balance sheet delivering approximately 30% ROE, Yangzijiang represents precisely the kind of quality-at-a-discount opportunity that value investors seek.
The P/B Screen: City Developments and MPACT
On a price-to-book basis, City Developments trades at 0.77x—the fifth lowest among STI components. The unveiling of its strategic review by September 2026 could serve as a catalyst for re-rating, with the review aimed at accelerating transformation into an asset-light real estate platform.
Mapletree Pan Asia Commercial Trust at 0.73x P/B is the fourth lowest. A recovery for Festival Walk in Hong Kong and three office buildings at the Makuhari sub-market in Chiba City could generate a meaningful turnaround for the REIT.
The Macro Context for Screening
The screening framework must account for the broader market environment. Singapore’s economy is forecast to record a firm pace of growth of 4.5-5.5% in 2026, with above-trend growth buoyed by resilient manufacturing activity and tight labour market conditions. MAS policy credibility, strong fiscal buffers, and newly introduced market reforms provide additional support.
Building a Value Portfolio
A systematic value approach in Singapore’s 2026 market involves combining multiple screening criteria. PE-based screens identify companies where earnings power is undervalued, while P/B screens surface asset-rich companies trading below intrinsic worth. The most compelling opportunities often satisfy both criteria simultaneously.
For Yangzijiang, the combination of a low PE, strong orderbook, net-cash balance sheet, and high ROE suggests a company where both earnings and asset value support the investment case. For City Developments and MPACT, the P/B discount combined with identifiable catalysts provides a clear path to value realisation.
The disciplined value investor’s advantage in this environment is the ability to look past headline index performance and identify the growing number of quality companies trading at discounts to their intrinsic value. The screening framework provides a starting point; fundamental analysis and catalyst assessment complete the picture.
