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QuestionsCategory: Business Quadrantditrupted business
Wan Kok kin asked 4 years ago

If a company is in a disrupted business and the revenues in recent years are keep plunging .But , the price is trade below book value ,  is it a good idea to buy .tq

1 Answers
Victor Chng answered 4 years ago

Hi Kok Kin,
 
As mentioned by you that the business revenue had been decreasing because of disruption. Despite the company dropping into the low PB ratio range which may look cheap. The important thing is to understand how big is the disruption and how much further the company revenue will continue to be affected. If the company disruption is big, you can expect the PB ratio continue to drop which lead by decrease share price.