Horizon.my

NTA = (Shareholders Funds – Intangible Assets) / No of Issued Shares

This is a quick and useful way to get a feel for a company’s value. For example, if a company’s NTA is RM1.50 and its share price is RM3.00, it implies a company’s share price is trading at twice its tangible book value.

This in itself is quite meaningless because most good companies have undervalued assets due to accounting conservatism.

However it is a useful indicator when benchmarking against industry peers. For example if you follow the banking sector and find that the average NTA multiple is around 2.3x and if a banking stock became available at 1.6x NTA, you would become excited and perhaps look at it more closely.