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What You Can Buy For US$14 Billion

So the most hotly awaited flotation of the year (apologies to Facebook) finally got underway. Yes, the IPO of Twitter got off the ground after the social media company sold 70 million shares at $26 a pop.

But without any earnings to speak of, the only way to value the company was through its price to sales. On that measure, the company’s shares are priced at 12 times forward revenues. It values the company at US$14 billion.

I am sure the owners and founders of Twitter are delighted at the bun-fight for shares in the yet-to-be profitable company. Mind you, there remains a question mark over how the company might make profits in the future. But that, I guess, is tomorrow’s problem. And as they say in the markets: It is better to travel than to arrive.

Personally I prefer to arrive than travel. So if I happen to have US$14 billion tucked away in my back pocket, what could I conceivable buy in Singapore?

Interestingly, the market value of Twitter is not a million miles from the likes of CapitaLand (SGX: C31), Hongkong Land (SGX: H78), Thai Beverage (SGX: Y92) and Jardine Cycle & Carriage (SGX: C07) – all of which are not only stalwarts of the Straits Times Index (SGX: ^STI), but also quite profitable. What’s more they even pay you for owning their shares.

Hongkong Land’s historic yield is 2.8%, while Thai Beverage’s yield stood at 3%. Meanwhile, CapitaLand’s distribution per unit worked out at 2.2% and Jardine Cycle & Carriage was a smidgen over 4%.

Whether Twitter tickles you fancy, it is always good to remember when buying shares that:

Revenue is vanity; profit is sanity; cash is reality and everything else is pomposity.

That might sound dreadfully old fashioned. But investing has been around a lot longer than social media has, and the old rules still apply.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore Director David Kuo doesn’t own shares in any companies mentioned.