CapitalistLAD Guide to Ratios: P/B Ratio (Part 2)

P/B Ratio Case Study: Investment arbitrage on KeppelLand

*Read part 1 of this article if you haven’t already.

In early 2014, I bought KeppelLand, a property developer, for $3.30. At $3.30, the P/B ratio was about 0.78. This meant that the stock was trading at a 22% discount to its book value. The P/E was ratio was 10 and they boasted a portfolio of high quality residential and commercial properties, of which some were awaiting project completion. After assessing the the stock based on other quantitative and qualitative metrics, I decided to buy the stock. I set a conservative target sell price of $4.20, which was the NAV of KeppelLand at that time. The dividend yield was a good 4.2% which made the deal even better.

Low and behold, I sold my KeppelLand sooner than expected at $4.50 in early 2015. The catalyst? Keppel Corp (parent company) offered to privatise KeppelLand between $4.38-4.60 a share. Do note that a 36% capital gain within 1 year does not come by often. If not for the privatisation deal, I might have to wait much longer for my investment idea to materialize.

This case study is just to illustrate the application of the P/B ratio. Do take into account that actual stock performance may differ greatly.

Total return on Keppel Land : 36% capital gain + 4.2% dividend = 40.2%


We have covered two financial ratios essential to investors; P/E & P/B ratios. In the next article, we will discuss how we use sales to value a company.

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Till next week, have a good weekend!


Nigel Fernandez


2 thoughts on “CapitalistLAD Guide to Ratios: P/B Ratio (Part 2)

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