EQUITY VALUATION USING PRICE MULTIPLES: EVIDENCE FROM THREE ASIAN COUNTRIES
Agristi, Ardine (Adv.: Vadym Volosovych), Vadym Volosovych
In this study I measure the performance of four price multiples (P/E, P/BV, P/CF, P/Sales) and one entity multiples (EV/EBVITDA) in predicting future stock prices in three Asian countries (Thailand, Malaysia and China) for the period of 2001-2011. I study the performance of single multiple in industry level, market level and the influence of combined multiples in equity valuation based on
Root Mean Square Error (RMSE) and TheilÂ’s coefficient. The most efficient multiples in predicting stock prices will have the lowest root mean square error value. Furthermore, I used the data from the three countries to construct samples that represent Asia. It is found that the most efficient price multiples in across sectors and countries are different. Nevertheless, at market level, price multiples is the most efficient in each country/ among industries in the three countries the most efficient price multiples vary while in the market level for the three countries P/E is the best multiples in predicting future stock price. Furthermore, the use of combined multiples does not increase in forecasting accuracy.
Kata Kunci : price multiples, stock prices, market level
