Q&ACategory: Dividend StocksPlotting historical Price-to-Book Ratio
PL Wong asked 9 months ago
Hello, I was trying to plot out the PB ratio charts as shown in the banks module. Should I use the daily close price and divide by the previous year\'s book value per year? Eg, (daily close price of 2023) / (2022 annual book value per share derived from 2022 annual report)?  Somehow the trending looks similar but the values seem a bit off compared to the video\'s charts (eg, the 2007 PB values look much higher). What might I have missed out? Thank you!  
Attachments
1 Answers
Rusmin Ang Staff answered 9 months ago

Hi PL,

I think your PB chart is fantastic except the year prior to 2008. I think it could be due to the rights. DBS has announced Rights issuance in 2008 at that time. So you may need to adjust for that.

https://www.sgx.com/securities/corporate-actions?value=DBS%20GROUP%20HOLDINGS%20LTD&page=3&pagesize=20

PL Wong replied 9 months ago

Hello, thanks! I relooked the DBS annual report. On page 84, there is mention of the rights and the number of shares as of 31 Dec is 1587mil. On page 138, the number of shares is 1962mil. Which number is the one that will be correct in this case? How should I take into account for Rights issuance in the Annual reports in general?

Report link: https://www.dbs.com/iwov-resources/images/investors/annual-report/DBS_AR_2008.pdf?pid=sg-group-pweb-investors-pdf-staying-in-the-course-of-asia

Thanks again!

Rusmin Ang Staff replied 9 months ago

You may use the 1,962m figures since there are more shares after the Rights issuance which need to be adjusted backward. If you’re feeling lazy, I think past ten years of data is sufficient. Remember the valuation of PB chart serves us as a quick rule of thumb for the current valuation, so we don’t really need to be precise but rough estimate is sufficient.

PL Wong replied 7 months ago

Thanks!

PL Wong replied 7 months ago

Thanks!