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Susan Phang asked 5 months ago

Hi Victor,
I have pulled out the financial data of the company Wilmar International from SGX stock screener and have used that to work out the intrinsic value and margin of safety. Please see attached pdf file.  I will send the file in XL format to you separately via email.   Please can you advise if my calculation correct from my understanding of the investment quadrant financial module.

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Victor Chng answered 5 months ago

Hi Susan,
 
I had looked through your excel and that is not how you do valuation. For Wilmar, they are a asset type of company so you can use PB ratio to value them.
 
You need to plot the 10 years PB ratio chart of Wilmar and find out their average trading range. To learn how to plot the chart, you need to look at this module: https://investmentquadrant.com/topic/price-to-earnings/. – There is a video right at the bottom that teaches you how to plot PE chart. The PB chart is the same just that instead of using EPS, you are using book value per share (other name: equity per share).
 
Do note that your financial is in USD and share price of Wilmar is in SGD. Hence, you need to convert the book value per share from USD to SGD using the exchange rate of that particular year. 
 
 

Erastus Jonker replied 4 months ago

How do you calculate if a business is asset-heavy? In one of the business quadrant modules you compared fixed assets to total assets. And which exchange rate must you take? Just the last available one or must you be more careful than that?

Victor Chng replied 4 months ago

Hi Erastus Jonker,

Yes, you should use the Fixed Assets to Total Assets ratio to gauge.

Since the share price is in SGD then you have to convert the EPS/book value per share from USD to SGD to plot the chart.