Cash Flow from Investing Activities

Cash flow from operations tells what cash was generated in the normal course of business and by changes in current asset and liability (working capital) accounts on the balance sheet.

• But what about cash used to invest in the business?
• Invest in other businesses?
• What about cash acquired by selling investments in other businesses?

The statement of cash flow from investing activities provides this information.

This section shows, among other things: cash used for investments in the business, including

• capital expenditures for plant, equipment, and
• other longer-term product assets.

For most growing companies, while cash flow from operations should be positive, cash flow from investing activities is often negative.

Why? Because growing companies need more physical investments - property, plant, and equipment (PP&E) - to sustain growth.

It is possible to generate positive cash flows in this part of the statement either

• by selling PP&E or
• by selling investments owned by the company.

More often than not, the total "Cash Flows from Investing Activities" is negative, and that is perfectly normal.

TIP: By comparing net cash flows from operations and net cash flows from investing activities, you can get a first glance at whether a business is productive and healthy.

If positive CFO > negative CFI, then the business produces more cash than it consumes.

But don't jump to a favourable conclusion too quickly - you may be looking at an airline (e.g. Air Asia ?) that's about to pay for five new jets in the next quarter. A surplus cash situation must be sustained to be meaningful.

How changes in Working Capital affect Cash

How changes in Current Liabilities affect cash

Increase in accounts payable (a bigger liability) generates cash.

• Suppose the company you're watching has a $45 million increase in cash from accounts payable.
• There is $45 million in cash floating around in the business that didn't show up in net income.
• Let's suppose that one large item was purchased for $45 million. An accounting expense was incurred when the payable was created, but no cash has yet been used to pay the bill. It's still in the bank.
• So while the expense was incurred, reducing earnings, the cash wasn't paid and, at least for now, there's more cash in the business.

Increase in current liabilities provide cash.

Decrease in current liabilities use cash.

How changes in Current Assets affect cash

In different financial statements, it is common to see account receivable, inventories and accounts payables either providing or using cash.

Increases in current assets (other than cash) use cash.

Decreases in current assets (as in a net decrease in inventory) provide cash.

Cash Flow from Operations

Net Income
----------
Operating Activities, Cash Flows Provided By or Used In:

Depreciation
Adjustment to Net Income
Changes in Accounts Receivable
Changes in Liabilities
Changes in Inventories
Changes in Other Operation Activities
----------
Total Cash Flow from Operating Activities



Cash flow from operations, CFO, tells what cash is generated from, or provided by, normal business operations, and what cash is consumed, or used in the business.

Net income from continuing operations is the starting point, to which cash adjustments are made.

To that figure, add (or subtract) what was called the "adjustments to reconcile net income to net cash provided by operating activities."

The first adjustment item is depreciation.

• For example, depreciation in Company X was $24 million. So, we known that without other adjustments, $24 millionn more in cash was generated than reported as net income, because depreciation was subtracted from net income, but not from cash flow because it isn't a cash expense.

Then a catch-all "Adjustments to Net Income" category.

After this, comes:

• "Changes In Accounts Receivables"
• "Changes in Liabilities"
• "Changes in Inventories"

Finally, you arrive at a total "Total Cash Flow from Operating Activities," derived by netting the adjustments to toal income.

• This is a very important figure. Essentially, this is cash generated by ongoing day-t0-day business activities.
• If this amount is negative, that's bad, because it means that the business isn't even supporting itself on a day-to-day basis and requires an infusion of cash.
• If it's positive - we're still not out of the woods yet - capital investments may still require more cash than the business is producing.

A bit of EBITDA

EBITDA measures operating cash generated before:

• non-operating interest,
• taxes, and,
• noncash depreciation & amortization.

In a sense, EBITDA is operating income before:

• bankers (non-operating interest), and
• government (taxes), and
• accountants (noncash depreciation & amortization).

EBITDA is also sometimes looked at as a liquidity measure:

• Positive-EBITDA companies can service their debt, while
• Negative-EBITDA companies must borrow more.

Beware of glowing announcements of positive EBITDA, especially when accompanied by losses on the earnings statement.

Income from continuing operations versus EBITDA

Revenue
less COGS
-----------
Gross Profit
less Operating Expenses
-SGA
-R&D
-Depreciation & Amortization
-Impairment, Investments & Write Downs
-Goodwill amortization
-----------
less or add interest
-----------
PBT
less tax
-----------
Operating Income or Income from continuing operations
less or add extraordinaries
-----------
Net Income


----


EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization

EBITDA measures operating cash generated before:

• non-operating interest,
• taxes and
• noncash depreciation and amortization.

Income from Continuing Operations

Operating income is simply sales less cost of goods sold, less operating expenses.


Because it includes noncash amortizations, it is a "fully loaded" view of operating performance in the business. (Depreciation and amortization expenses are usually broken out on the earnings statement, but may also be buried in a consolidated SG&A, or other operating expense line.)


If you closely observe the effects of amortizations, special write-downs, and accounting changes, you can better understand operating income and operating income trends.



Income from continuing operations tell shareholders, in total, what their investment is returning, after everyone, including Uncle Sam and his brethren, is paid.


Income from continuing operations is a good indicator of total business performance, but be aware of truly extraordinary events driving expenses or income.

Earnings Yield: Bond versus Growth Stock

PE Ratio and Growth

It would be nice if looking at price, P/E, and earnings yield was all there is to it. Find an earnings yield of 6% (PE of 17), beat the bond, and move on.

But you're buying equities, not bonds, right?

• Because you want to participate in company growth and success.

And why do you want to do that?

• Because, simply, you want to leave that static bond yield in the dust - if not today, sometime in the near future.
• And you want to keep up with - or better yet, beat - inflation.
• So to do that, you assume some risk that earnings won't happen, but you are hanging your hat on growth and a stock price that keeps up with it.

Given these choices, what would you do?

• Buy a bond for $100; receive $5 per year for 10, 20, 30 years; never look back.

or

• Buy a stock for $100, earnings per share constant at $5 for 10, 20, or 30 years with no change.

Should have bought the bond. Why?

Less risk.


----


But suppose the $5 earnings "coupon" grows at 10% per year. What happens at the end of year 10?

If the price were to stay the same, your $100 investment would be returning $12.97 in year 10, which is almost 13% earnings yield, or an implied PE of 7.7 at today's price.

A pretty nice yield, which really means the price of your investment should go up, because it's worth more.

This spreadsheet shows future earnings yields realized in the case of a bond with no growth versus a stock with a 10% earnings growth.

http://spreadsheets.google.com/ccc?key=0AuRRzs61sKqRcjdfd19OVTZrVVRlTUJnb05naGo3TWc&hl=en

So you can see that assessing growth is a major factor in analysing a stock price through PE.

Above all else, earnings growth drives stock price growth.

So value investors look closely at what the earnings yield is today and what will it be in the future.

Integrax

Integrax 6.7.09

http://spreadsheets.google.com/ccc?key=0AuRRzs61sKqRclllX1NCY1poWDZmVUNVX1pMV2Nfenc&hl=en


http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?ric=IERX.KL

Risk - the most difficult to quantify element (II)

If you reflect on Buffett's approach, you realize that the risk isn't inherent in the stock's price, but rather on the clarity and consistency of a company's future prospects.

The more unpredictable (hard to understand) the company and its future, the greater the risk.

There is no way to easily quantify this kind of risk.

Generally, business risks are accounted for in the discount rate by making a conservative assumptions - a high discount, or hurdle, rate - to provide a margin of safety.

Risk - the most difficult to quantify element (I)

Risk is perhaps the most debated, theoretical, difficult to quantify element of all. There are many types of risk in the business and investing world.

Investment books mention high beta stocks are riskier and low beta stocks are safer. However, beta is relatively meaningless for value investors. Why?

• Because it measures the fluctuation of stock prices.
• As a value investor, you aren't concerned with stock price fluctuation, only whether the stock price is a bargain compared to long-term value.
• Value investors ignore the type of risk measured by beta.
• They're more interested in how the company performs, not how the stock performs relative to other stocks.

Beta is useful only in the sense that higher price volatility for an issue may reflect underlying uncertainty in the company itself, such as with many of the higher flying tech stocks in 2000 and 2001. But the risks associated with these stocks become apparent long before you examine beta.

Who is Mr. Market?

Who is Mr. Market?

Mr. Market is the character Benjamin Graham uses to explain illogical mindset of traders . The story goes something like this:

Imagine that you own 50% of a business, which you purchased for RM3,600 mil. Mr. Market approaches everyday to tell you what he thinks the business is worth based on latest news. And everyday, he offers to either buy your business for a price which he forms in his head, or, to sell you his share of the business for that price.

Each day, however, he quotes you a different price from the day before. Sometimes the price he quotes sounds about fair. Sometimes it’s high. Sometimes it’s low.

Let’s say the whole business is producing on average, RM 1,200 mil free cash flow with net profit of RM 600 mil. What is the value of the business to you?

By owning 50% of the business, you own RM 600 mil FCF and net profit of RM 300 mil per annum.You paid around RM 3,600 mil for this business a year ago. Hence, you bought this business for 6 times its FCF and 12 x earnings.Let’s say the nature of the business is stable and you anticipate the FCF and net profit will increase over time,you might not want to sell it unless Mr. Market offers you a ridiculously high price.

One day, Mr. Market offers you an additional 40% extra of what you paid a year ago. He offers RM 5,040 mil to for your holdings.Most of us will let go after making 40% profit per annum.

But if you are a sensible businessperson, you won’t let Mr. Market’s daily communication determine your view of the value of 50% interest in the business. He is a sweet talker and convince you with various economic prediction,charts,information and etc to create doubt and fear in you.

Most of us will be swayed by Mr Market ’s offer.

But as a sensible business owner, you may be happy to sell out to him when he quotes you a ridiculously high price, and equally happy to buy from him when his price is low. But the rest of the time you will be wiser to form your own ideas of the value of your holdings, based on full reports from the company about its operations and financial position.

Remember, fluctuations in the market price for a given business don’t really affect the fundamental value of that business. If you own a share in a company, the value of each share is a function of the business ’s profitability/cash flow/management/branding and not a related to the price quoted in Bursa M’sia.

So, as long you understand the business you’re buying, today’s market price is totally irrelevant.



Ref:

Who is Mr. Market?

http://boyboycute.wordpress.com/2009/03/29/who-is-mr-market/

How to use PEG

Company Simpson:

Recent PE 17.6 based on:

• a share price of $33 and
• TTM earnings of 1.87.

Earnings yields would thus be 1/17.6, or 5.7%.

What is the significance?

This investment could be compared to a long-term Treasury security as a prospective investment.

Treasury security: today yielding about 4.5%.

Which investment is better?

An investment in Simpson returns more, and, although riskier, it affords the opportunity for gain through growth.


The difference in earnings yield illustrates the basic risk/return tradeoff between investing in corporate equities versus safe fixed-income Treasuries.

----

You still don't know whether Simpson's PE ratio of 17.6 is attractive or compelling.

Long-time tech high-flyer Cisco Systems is at PE ratio to 27.4.

While banking stalwart Bank of America is at PE ratio of 10.


Why the difference?

The primary reason is growth.

Investors pay higher PEs for companies with greater growth prospects.

Greater prospects mean greater earnings and greater earnings yields sooner.

So when comparing businesses, one popular way to "normalize" PEs is to compare them to their respective company's growth rate.

From this comparison, you get a ratio known as PE to growth, or PEG:

Price/Earnings to growth (PEG) = (PE)/(EPSGR)

If the earnings growth rate of :

• Cisco is 25%, while
• Simpson's is 10% and
• Bank of America's is 5%,

then their respective PEG is:

• 27.4/25 or 1.1 for Cisco,
• 17.6/10 or 1.76 for Simpson, and
• 10/5 or 2 for Bank of America.

Now if you are confident in the sustainability of the growth rates, you'd pick Cisco as the best investment, because its PE is modest compared to its growth rate.

----

So, the lower the PEG, the better.

But if the low PEG is driven by high growth rates, you'd better be confident in the growth rate assumption.

Nothing falls faster than a growth stock that suddenly stops growing.

For years, Starbucks had been a high PE and high growth story, with PE ratios exceeding 30 and growth rates exceeding 20%. When the growth rate slowed just a bit in early 2007, the stock lost a third of its value.


----

Projecting growth rates can be tricky, and for that reason, value investors tend to shy away from stocks where growth appears temporary or hard to justify long term.

What rate should you use?
What the company has already achieved?
What the analysts project it to do?
Over what period?
When will the growth rate run into the law-of-large numbers-wall?
What growth rate did those Krispy Kreme Investors use in the 2000 - 2004 period?

Most of them ended up with a sticky mess.

The big question , of course, in picking Cisco as the "best investment," is the sustainability of the growth rate.

Simpson, while trailing a bit, may be a safer and better long-term investment.

Summary: It is okay to assume a high growth rate, so long as it is sustainable growth, based on sustainable business and marketplace fundamentals.

The Right Valuation Ratios

The market decouples price from the value of the business.

As Warren Buffett says, price is what you pay, and value is what you get. If the markets were perfect, price and value would go hand in hand, but as we all know, markets aren't perfect.

Once you appraise the business value, look at price and use valuation ratios to connect the price to the business.

PE: This is where most investors start, but it doesn't tell the whole story.
EY: Value investors look at present and future earnings yield (1/PE).
PEG: Price earnings to growth relates PE to growth rates and tells you something about that earnings yield future.
P/S, Profit Margin, P/B, and ROE: The relationships between price and these are also important.

For example:

FD interest rate = 3%.
PE of FD = 33.3.

So a PE of 25 or less is good given today's alternative earnings yields, but it doesn't mean that much without looking at the other numbers.

----

These valuation ratios are good signs (of value) for growing companies:

• a PEG of 2 or less,
• a P/S of 3 or less, and
• a P/B of 5 or less.

Lower figures of these valuation ratios can be expected for steady or transitioning companies.

----

Good Business, but Stock is too Expensive

Generalising is hard, but PE, PEG, P/S, and P/B well in excess of market or industry averages spell trouble in making the numbers, as does overdependence on abnormal margins.

These valuation ratios are signs of overcooked prices and raise questions of vulnerability and (un-)value:

PE: Look at PE compared to the market and the industry. A PE over 40 is hard to justify in any case. PE over 25 is hard to justify unless the growth story is there and intact.
EY: EY below 2.5%
PEG: PEG greater than 3
P/S: P/S greater than 3
P/B: greater than 10

Sam using PE

Samgoss said...
2 steed, i stated there nett asset,my nett asset is actually nett current asset which equal 2 current asset minus current liabilities.

What caused negative asset ? tak lain tak bukan is bcos of borrowing , come 2 NTA, NTA is nett tangible asset , tangible means something u can count n touch, what about goodwill ? all these depends on what type of biz they r involving.

WHen I said Low PE , u shouldnt just rely on its last year eps, u must look at its latest eps oso, that giving u a guide to know how she is doing now !?

That's y I always stressed there d importance of " past earning track records ".

Uncle sam using PE , do u know how 2 relate PE with others ? not just Low PE , from PE ..past , current n future eps + track records, all these r essential elements 4 u 2 forecast its future eps as well as PE.

as i said, it looks simple , u understand it doesnt mean u know how 2 apply it , it is just like financial crisis, some will take it as disaster but some may take it as opportunity , it depends on how well u understand on PE.

Yes, I am a PE man , but i can tell u, from PE , i can link lots of cause n effect into my PE.

One more thing , different industry has different PE , u cant compare PE of resorts with PE of Rcecap or Kfima , cos one is bluechip n d other one is penny stock. hence.. u must know what is d average PE 4 that industry !

Avg PE 4 banking is ard 15 to 20 , avg PE 4 penny stock is ard 12+- , hence when PBBor MBB dropped to PE ard 10+- , it is time to sailang , but u cant apply this to penny stock, cos it is not very cheap 4 penny stocks @ PE ard 10+_.

but one thing 4 sure , stock that traded with PE > 20 is no longer cheap !

D above is like telling u yr mom is a female , but i can assure that not many of them know how 2 apply it on shares invst, like what i always said , y d length of our fingers r not d same ^_-

July 3, 2009 7:26 PM


https://www.blogger.com/comment.g?blogID=2900671137131972978&postID=269801610029410286

How Value Investors View the Markets and Market Performance

Value investors really don't care. Do value investors have an attitude problem?

The point is that value investors aren't that concerned about markets, trading processes, and trading behaviour.

The market is simply a place to buy a portion of a business - and perhaps not sell it for a long, long time. Value investors care little about whether an order is executed on the bid or ask price, nor do they care what regional market, ECN, or execution system was used.

The transaction is an investment, a long-term investment. The market simply provides a place to acquire the investment.

So, value investors generally don't talk much about markets. And if you're really a value investor (or want to become one), you yourself don't care about markets... except when they undervalue businesses.

Despite the academic rumblings of the "efficient market theory" (which holds that with good information and a sufficient number of players, markets will find the right price for a business), markets are not perfect. They are always bargains.

Stocks may be undervalued because of:

• lack of knowledge or
• lack of visibility, or
• perhaps they're part of a group that's out of favour altogether.

These stocks are selling for less than may be indicated by the value of the business or the potential of the business.

So, in this sense, value investors love the markets. The markets, through their imperfections, provide value investors their opportunity.

As Warren Buffett says, if markets were perfect, he'd be "standing on the corner holding a tin cup."

Long-term Stock Market Growth and GDP

A stock market represents the sum total of the public's perception of the business value of the companies trading in that market.

True business value, is the sum total of productive assets and, in particular, what those assets produce in the form of current and future earnings.

As long as companies produce more, it makes sense that their values rise.

And as long as the public perception matches true value, the stock value rises in lockstep.

GDP

You can and should expect, in aggregate, that the total value of all businesses would rise roughly in line with the increase in the size of the economy, as represented by gross domestic product (GDP). This is true.

Business value grows further through increases in productivity.

The value of market traded businesses could rise still more if the businesses grew their share of the total economy - as Borders Group and Barnes and Noble have grown their share of the total bookselling business.

Long-term stock market growth (by most measures of return, 10-11% annually) can be explained by adding together the following:

GDP growth of 3 to 5%
Productivity growth of 1 to 2%
Long-term inflation in the 3 to 6% range

In the short-term, depending on the value of alternative investments, such as bonds, real estate, and so on, market value may actually rise faster or slower than business value. And inflation also tampers with market valuations.

So can markets grow at 20% per year?

Not for long. It isn't impossible for the markets to rise 20% in a given year or two, but such growth year after year is hard to fathom if the economy at large is growing at only 3 to 5% annually.

But for a particular stock?

Sure, it's possible. If the company is building a new busines or is taking market share from existing businesses, 20% growth can be quite realistic.

But forever?

Doubtful. Some call this "reversion to the mean" - sooner or later, gravitational forces will take hold and a company will cease to grow at above-average rates. As an investor, you must realistically appraise when this will happen.

Intrinsic Value = (2g+8.5) x EPS

Dissecting Graham's Intrinsic Value Formula


Graham's formula:
V = (2g+8.5) E x 4.4/Y

where,
V= intrinsic value
g= growth rate of earnings
E= current EPS
Y= current interest rate (average rate of high grade corporate bonds)

V = (2g+8.5) x (4.4/Y) x E

V = (Multiple) x E

Therefore the Multiple of E is a multiple of 2 components as illustrated

Multiple = (2g+8.5) x (4.4/Y)

(I) If Y is equal to 4.4
(4.4/Y) = 1
Multiple = (2g + 8.5)


(II) If Y is less than 4.4
(4.4/Y) > 1
Multiple > (2g + 8.5)


(III) If Y is greater than 4.4
(4.4/Y) < 1
Multiple < (2g + 8.5)


As we are presently in a low interest environment, let us assume that Y is equal or less than 4.4. Therefore, the multiple should be equal or more than (2g + 8.5), as in (I) and (II) above.

To be on the conservative side, we can use (2g + 8.5) as the multiple of EPS as a simple quick test to check on the stock's price and true value (intrinsic value).

Simplified Graham's formula:
V = (2g + 8.5) x EPS


EPS can be derived by multiplying [(1/PE) x Price of stock], both are readily available in the local paper.

Reminder: You shouldn't go out and buy or sell stock based on this formula alone, of course, but it's a great "quick" test of a stock's price and true value.

Graham's Intrinsic Value Formula

Graham did create a very useful and easy-to-use intrinsic value formula.

Graham's formula: You take a current earnings, apply a base P/E ratio, add a growth factor if there is a growth, and adjust according to current bond yield. The result is an intrinsic value that the stock can be expected to achieve in the real world if growth targets are met.

Formula: Intrinsic value = E x (2g + 8.5) x 4.4/Y

E = current annual earnings per share
g = annual earnings growth rate. (Graham would have suggested using a conservative number for growth.)
8.5 = base P/E ratio for a stock with no growth
Y = current interest rate, represented as the average rate on high-grade corporate bonds. (Note that lower bond rates make the intrinsic value higher, as future earnings streams are worth more in a lower interest rate environment.)

Take Hewlett Packard as an example. With current earnings (trailing 12 months) of $2.30 per share, a growth rate of 10%, and a corporate bond interest rate of 6%, the intrinsic value is

= $2.30 x [(2 x 10) + 8.5] x (4.4/6)
= $48.07 per share

This value almost exactly matches the price at the time that these calculations were made. That suggests little potential price appreciation in the stock - unless per share earnings growth accelerates or bond yields dip.

Acceleration in the business would increase the earnings growth rate, and share repurchases would increase the earnings per share. Both changes, especially taken together, would stimulate growth in intrinsic value.

You shouldn't go out and buy or sell stock based on this formula alone, of course, but it's a great "quick" test of a stock's price and true value.

Malaysian REITs

Malaysian REITs are:

• KPJ Reit
• Boustead Reit
• Amfirst Reit
• Axis Reit
• Hektar Reit
• Starhill Reit

and

• AHP
• AHP2,
• ARREIT,
• ATRIUM REIT
• QCAPITA REIT
• TWRREIT
• UOAREIT

Financial Year 2008
KPJ Reit
EPS: 7.4c
DPS: 7.7c
NAB/Share: 1.03
D/E Ratio: 0.53
Rental Income to Property Assets: 0.07
Nett Rental Margin: 94.52%
ROE 9.93%

DY range: 9.8% - 7.8%
Price range: 0.83 - 0.93
PE ratio range: 10.5 - 13.2

Financial Year 2008
Boustead Reit
EPS: 11.0
DPS: 10.9c
NAB/Share: 1.26
D/E Ratio: 0.14
Rental Income to Property Assets: 0.08
Nett Rental Margin: 97.77%
ROE 27.13%

DY range: 11.0% - 6.8%
Price range: 0.99 - 1.60
PE ratio range: 9.0 - 14.6

Financial Year 2008
AMFIRST Reit
EPS: 7.3c
DPS: 8.0c
NAB/Share: 1.03
D/E Ratio: 0.89
Rental Income to Property Assets: 0.07
Nett Rental Margin: 70.25%%
ROE 7.07%

DY range: 10.8% - 8.4%
Price range: 0.74 - 0.95
PE ratio range: 10.1 - 13

Financial Year 2008
AXIS Reit
EPS: 15.2c P
DPS: 14.9c
NAB/Share: 1.75
D/E Ratio: 0.07
Rental Income to Property Assets: 0.09
Nett Rental Margin: 84.41%
ROE 14.17%

DY range: 15% - 7.5%
Price range: 1.00 - 2.00
PE ratio range: 6.5 - 13.3

Financial Year 2008
HEXTAR Reit
EPS: 11.3c
DPS: 10.7c
NAB/Share: 1.26
D/E Ratio: 0.75
Rental Income to Property Assets: 0.12
Nett Rental Margin: 62.69%
ROE 15.01%

DY range: 14.7% - 7%
Price range: 0.73 - 1.54
PE ratio range: 6.4 - 13.4

Financial Year 2008
STARHILL Reit
EPS: 6.9c
DPS: 6.9c
NAB/Share: 0.97
D/E Ratio: 0.16
Rental Income to Property Assets: 0.08
Nett Rental Margin: 83.73%
ROE 7.09%

DY range: 9.8% - 7.5%
Price range: 0.70 - 0.93
PE ratio range: 10.2 - 13.4

Also read:
REITs - Selecting REITs

REITs - Selecting REITs

Choosing a good REIT is like choosing any other value investment.

Assets = Real Estate
Debt = Debt
Returns = Rents + other payments received on the portfolio.

An investor must analyze and compare a REIT's:

• management quality,
• real and anticipated returns,
• yields, growth,
• reserves, and
• asset values.

Many of the techniques for common stock can be put to work here.

PE and price to FFO (funds from operations) ratios are examined as they would be for other businesses.

• Compare the PE and price to FFO for the different REITs.
• Relate these PE and price to FFO to their growth rates.

Also important is the price to book, or P/B ratio.

• A REIT trading below its per-share book value is essentially trading at a discount.

Remember also that REITs are not immune to :

• asset quality problems,
• bad management and management decisions,
• declining markets, or
• poor expense management.

Do the due diligence.

Malaysian REITs are:

• KPJ Reit
• Boustead Reit
• Amfirst Reit
• Axis Reit
• Hektar Reit
• Starhill Reit

and

• AHP
• AHP2
• ARREIT
• ATRIUM REIT
• QCAPITA REIT
• TWRREIT
• UOAREIT