Select Page
QuestionsCategory: Valuation QuadrantPrice/Book Ratio Calculation
Marcus Lee asked 3 months ago

Hi,
I recently tried to calculating PB ratio of UOB bank but my numbers seems quite far off from what I saw in your video (although it\’s 1 yr old -> https://www.youtube.com/watch?v=WDOCTOufwBs).
In your video, your calculated mean PB was 1.33 whereas my calculated mean PB is 0.99 (see attached PDF file). I used the “NAV per ordinary share” in the financial reports as the “Book value” in my excel file for calculation. Is this the correct parameter to use?
Will appreciate your help in identifying where I went wrong. Thanks!

P.S. Apologies for the messy PDF file. The website doesn’t allow me to upload the original excel file.

4 Answers
Victor Chng answered 3 months ago

Hi Marcus,
 
can you send the excel file to victor@fifthperson.com 
 
Let me take a look and get back to you here. 

Victor Chng answered 3 months ago

Hi Marcus,
 
I have looked through your data point already. 
 
Your methodology of inputting the data point is correct. You must change the price data point from adjusted close price to close price. 
 
The PB chart should be based on ten years, not five years. 

Marcus Lee replied 3 months ago

Hi Victor,

Thank you for looking through my data. Appreciate your help.

Understood regarding the close price, will make the necessary changes.
I had this impression that the adjusted close price would be more accurate (i.e. taking into additional shares which were distributed).

Also, should both PE and PB charts always be 10 years?

Thank you

Victor Chng replied 3 months ago

Hi Marcus,

The close price accounts for all those additional shares and split already.

In most cases, you should use ten years unless the company grows fast or the ten-year chart is distorted.

Marcus Lee replied 3 months ago

Understood. Thanks a lot Victor!

Victor Chng replied 2 months ago

Welcome Marcus :)

Marcus Lee answered 3 months ago

Hi Victor, 
Apologies for the repeated questions. What is the difference between NAV and Revalued NAV? Which should I be using to calculate the Price/Book ratio?
Thank you.

Marcus Lee replied 3 months ago

Also, when calculating PE ratios, should I be using Basic or Diluted EPS?

Thank you!

Victor Chng answered 2 months ago

Hi Marcus,
 
Revalued NAV is based on the actual property value at the moment. You can use NAV for calculation. 
 
You can use diluted EPS for PE ratios.