SingTel

[hongonn]

ask yourself the following question:

Do you buy singtel based on its book value? What's the ratio are you looking at? Pb =?

Goodwill is an accounting requirement, if you like, you can write off its goodwill for your own convenience. And you can write off anything you don't like in the balance sheet. Your valuation does not need to follow accounting standards.

I got interested in Singtel is more on the business aspects, which are:

1. They have many joint ventures where got involved in developing countries.
2. They have business oversea so have more market exploration opportunities.
3. They start doing mobile data and content services instead of stay on traditional telco business.
4. Generally their finance is quite ok, PE is not demanding, margin good and ROE is fine.
5. The most important thing, the ex-CEO has left the company.

And i thought the Optus chapter has closed until i discover the huge $9.6b goodwill still remains on the book, it becomes quite an eye sore.

It make me think like keeping a cow which consume 70% of the grass but only produce 30% of the milk. The worst thing is i overpaid the cow by 100%. Will you get upset? Should you slaughter the cow?