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Use Net Tangible Asset (NTA) to determine a stock’s value (用有形资产净值来决定一个股的价值)

We all know that fundamental analysis consists of analysing a company’s future, ROE, PE ratio and profits. However, there is another value that people likes to use other than PE ratio, in order to determine whether a stock is undervalued or overvalued. That value being the net tangible asset (NTA).

The writer had explained what is NTA before, and I will put the link below for you to revise. Basically, NTA is calculated by taking its total assets and deduct all intangible assets and total liabilities, and obviously we can divide it by total number of shares to acquire NTA per share. In another word, NTA is assets that can be sold and is able to show the company’s financing power and risk levels. However, NTA will vary between different industries, where internet-based companies will have a lower NTA due to most of their assets are stored in the cloud, while consumer products companies will have a higher NTA since most of their products can be sold and liquidated into cash.

So, how can we tell whether the company is undervalued or overvalued by assessing its NTA? For this, we just need two values, which are NTA and share price. NTA can be taken from KLSE Screener or MalaysiaStockBiz, where share price can be taken from literally everywhere. All we need to do now is just compare the NTA with share price, if NTA is higher than share price, means it is undervalued; whereas when share price is higher than NTA, means it is overvalued. From the examples given, we can see that if we are just basing on the comparison between NTA and share price, PPHB is undervalued whereas MAGNI is overvalued.

In short, NTA comparison is only ONE OF THE METHOD to see whether is overvalued or not. There is absolute no rule stated that we must follow this method, but neglecting other better methods. Do note that NTA can only be set as a guideline, growth and future prospects are still the most important elements when comes to company selection.



那我们应该如何用有形资产净值来看公司现在的股价是否被高估或低估呢?其实我们只需要两个数值,就是有形资产净值和股价。有形资产净值可以再KLSE SCREENER和Malaysia Stockbiz的网站拿到而股价则可以在任何地方得到。那我们现在就要比较这两个数值,如果有形资产净值比股价高,那他就是被低估了。反之,如果股价比有形资产净值高,那么公司现在就是被高估了。从例子上来看,如果我们单纯的只是用有形资产净值来评估公司是否被低估的话,PPHB是被低估,而MAGNI是被高估的。


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