Why PBV < 1 may not be cheap

[donmihaihai]

PBV is a common valuation multiple. The distribution of this multiple for the Bursa Malaysia Main Board in Aug 2023 has a median of 0.77. In contrast the median for the PBV for May 2014 was 0.94.

The chart below shows the distribution of the PBV for these 2 periods.  You can see that the 2023 distribution is skewed towards the lower end.



If you have a median of less than 1, a PBV < 1 may not necessarily be cheap. As such I use the PBV as a screening metric, but I used the DCF method to determine the intrinsic value. If you want to know more about how I value companies go to “Do you really want to master value investing?”

Just like singapore, malaysia has gotten cheaper in thr last 10 years. About 250 companies trading at 0.5x bv or lesser.  Only need to find a handful out of these. To fish where the fishes are