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ashz asked 3 years ago

Hi there
Could I have a quick refresher on how to use PB to check the best price to purchase the share? would it be (a) calculate the net asset (taking out any intangibles and one off item) (b) using the net asset to check the revised PB value over a few years (c) look at what the average revised PB value is (d) decide on entry price based on the current revised PB value price?

2 Answers
Victor Chng answered 3 years ago

Hi Ashz,
 
First you have to plot the PB chart which uses the net asset value including the intangibles asset. (Do note that one off item is found under income statement. Hence net asset, there is no one off item). Secondly, find the average PB range and purchase the price below the average PB ratio with a discount.

ashz replied 3 years ago

so in other words, there is no need to net off anything for PB calculations?

Jieren Zheng replied 3 years ago

Usually no need, but if you’re gonna do it, make sure you are consistent, else your ranges will look quite weird. But I think for ease, just use the NAV straight to calculate.

I find it easier to decide when I’m checking prices outside.

Victor Chng replied 3 years ago

Thanks JR

Jieren Zheng replied 3 years ago

Welcome :)

Victor Chng answered 3 years ago

Hi Ashz,
 
It is as what jieren had mentioned.