Brandon Wong asked 2 years ago
Chee Hoi Shak Staff answered 2 years ago
Hi Brandon,
For P/B ratio, the equation is derived from (Share Price)/(Net Asset Value or NAV per Unit). For share price, you can refer to Yahoo Finance or Google. For NAV, you can take the figures directly from annual/quarterly reports. E.g. in MIT AR 2024, p. 118, the NAV was S$1.76 in March 2024.
So, if you plot the P/B ratio, you will have taken into account of the NAV already.
Based on the attachment, I have used MIT as an example and keyed in its highest and lowest share price as well as NAV in the past 5 years. Then I calculated its highest and lowest P/B ratio in the past 5 years based on the equation mentioned. If I average out the lowest P/B ratios, I will get a figure around 1.31. If I multiply 1.31 with its latest NAV figure, 1.76, I will get an approximate intrinsic value of around S$2.31, which means I will take a deeper look at MIT when it trades at the figure (now).
Attachments
Chee Hoi ShakDepending on how in-depth you want your data to be, you can also compile the past 10 years data or since MIT was listed. And you can also further make your data more accurate by including the quarterly NAV data from quarterly reports instead. You can even use the daily share price data. Whichever way works for you!
The attachment above is a quick one based on 5Y data and NAV at the end of each financial year.
You will realise MIT's share price trades above its NAV most of the times because investors price it this way and this REIT has increased its DPU year after year for 11 years since it was listed in 2011, which is quite impressive. Recently, it got affected by issues like tenants defaulting and high financial cost.
Like what Rusmin mentioned in the course, you can further support your P/B ratio data with distribution yields.
Brandon Wong
replied 2 years ago Thanks Chee Hoi!
Brandon Wong answered 2 years ago
Hi Brandon, yes you can, you can refer to the PB and dividend yield modules as well as their limitations under Bank Valuation as done by Victor.
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Hi Rusmin & Victor, is it a good time to pick up mapletree tree industrial trust now that it is at $2? Tks
Hi Isaac, you can compare MIT’s historical high and low yields to make a call, or you can also let us know what you think based on the yields, PB, etc. and we can further provide our input 🙂
Hi
My calculations indicated a good price to enter would be about $2.10. However, given all the negative news with MIT, is it still a good time to buy?
Hi Candy, MIT’s share price has reached a 5-year low (S$2.00) while its distribution yield has reached 6.72%, which is quite attractive to me (based on its DPU in FY2024 at S$0.1343). MIT passed the Valuation part. Half of their industrial assets are in Singapore where land is scarce, (Business). The remaining half are data centres in the US and Japan. The manager actually gave increasing DPU almost year after year until FY2023 (Management/Financial). Here are some additional info/risks that you can take a look.
https://www.youtube.com/watch?v=t6wyJ6RNeiw
https://drwealth.com/mapletree-industrial-drops-3-after-jpmorgan/
You make the call 🙂