Singtel Market Value

(i) Book value per share = Total Equity/Shares Outstanding = 24,767,900,000/15,943,500,000 = $1.55

Market Value per Share (31/3/2015) = $4.38

(ii) Since the company’s assigned book value reflects the assets’ cost of goods sold (reported at historical costs) and the market value is recognised at the point of sale of an asset, there would be a discrepancy between both values which would not be accounted for in the financial statements. (Appendix xx)

One such example as reflected in the Property, Plants and Equipment schedule are the Buildings owned by SingTel. From the notes to the Financial Statements, it can be seen that SingTel owns $798.5 million buildings, some of which have been purchased a long time ago, and are recorded at

The asset must also be identifiable, the company needs to have control over the asset, there must be existence of future economic benefits attributable to the asset and company must be able to measure the cost of asset reliably.

The reason why SingTel’s innate brand is not recorded is because the cost of SingTel’s brand cannot be measured reliably as the economic importance of SingTel’s brand cannot be determined of valued for that matter. The cost incurred in establishing SingTel’s brand also cannot be distinguished from the cost of establishing the company as a whole.

Also, we recognise that any company wishing to purchase SingTel’s brand must have the technological know-how to replicate SingTel’s business in order for the brand to maintain its credibility. Hence, Singtel’s brand is identifiable, provided the purchasing company possesses the right

Hence, its brand would be of significant value.

The discrepancy between market and book value of Singtel’s equity arises due to exclusion of the Singtel’s innate brand value from its books. However the marginal investor will take into account the brand value of Singtel in his aggregation of market value.

(iv) Understanding the discrepancy between book value and market value of equity is vital in analyzing a company for investment. A company’s book value of equity, also referred to as accounting value of equity, is its common stock equity according to its financial statements, which is equal to its total assets less liabilities, preferred stock and other intangible assets. This is also the amount of assets a company would have left if it went out of business. On the other hand, the market value of a company refers to its perceived price in the market place. Whether or not book value is a precise assessment of a company’s value is determined by stock