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QuestionsCategory: MiscellaneousShare of post acquisation reserve
Cecilia Lui asked 4 years ago

Hi Victor,
I have a question regarding the recoding of Associate A/C & Joint Venture A/C in the balance sheet.
Please refer to the following example:-
Quoted equity shares at cost           111,700
Share of post acquisition reserves     85,500
Share of changes recognized directly in associates’ equity  (39,000)
May I know what is share of post acquisition reserves? Will this amount change every year?
And also what is share of changes recognized directly in associates’ equity?
Thank you.
 
 
 
 

6 Answers
Victor Chng answered 4 years ago

Hi Cecilia,

 

Can you let me know the company so i can take a look at the account

Victor Chng replied 4 years ago

Hi Cecilia,

From my understanding after reading the notes, the figure should be changing every year if the company make profit or loss. As for share of changes recognised directly in associates’ equity, as it mentioned that it is quoted equity which means listed companies share hence the value of the share will fluctuate so the figure also will change.

Cecilia Lui answered 4 years ago

Hi Victor
It is metro holdings

Cecilia Lui answered 4 years ago

Hi Victor
Another question is on the Price to Sales Ratio.
This valuation method is used for cyclical industry.
In your Video, you cited Wilmar as an example. As compared to their peers, it’s price to sales is only 0.35x. It’s is the lowest among the peers. But what about the intrinsic value of the companies, what valuation method should I apply on those cyclical companies, like shipping industry or commodity company as the companies can be very profitable in their good times period and very bad in their down times. So how to determine the intrinsic value of cyclical companies like Wilmar and YZJ?  
Thank you.
 
 
 

Victor Chng answered 4 years ago

Hi Cecilia,
P/S are used when the company is making losses. You can determine what is their average PS in the past and used it calculate the IV. 

Cecilia Lui answered 4 years ago

Hi Victor, 
So sorry I don’t quite understand. Could you give an example to use price to sales ratio to find the intrinsic value.
Thank you.

Victor Chng answered 4 years ago

Hi Cecilia,
 
What I meant is that for instance the average PS of the company is maybe 3x while the low is 1x and high is 5x. Let say the company Sales per share is $1 than you take $1 multiply by 3 which give you a IV of $3.

Cecilia Lui replied 4 years ago

Thank you very much.