Research On Valuation And Pricing Of GW Company,a Silicone Enterprise

The rapid development of China’s capital market has effectively guaranteed the healthy operation of the economic system.More and more excellent enterprises have solved their long-term capital needs through listing financing.Investment institutions invest in the invested enterprises through valuation,equity transfer or exit from the market to realize investment income.How to evaluate and price the invested enterprise objectively and fairly?No matter from the theoretical or empirical perspective,it is difficult to find a universal and fair basis and method.Based on the advantages of Ohlson model[1]in the use of accounting information,this paper takes GW Company,an organic silicon enterprise,as the research object.Through analyzing the limitations of traditional valuation methods used in the valuation of the company,the paper uses the correlation and linear regression knowledge of econometrics to collect the financial information disclosed by listed companies in the organic silicon industry for calculation,The purpose is to find a method suitable for the company’s valuation and verify its rationality from the perspective of empirical research.As an article to study the scientificity and relevance of enterprise valuation,this paper has more important and practical significance for the development of the research theory of enterprise valuation in the capital market,as well as for the listing valuation of other organosilicon enterprises,and how to improve the stock price after listing.In view of the limitations of traditional valuation methods,these methods are not fully applicable to the valuation of silicone enterprises.The market valuation method is based on the PE,Pb and PS values of the listed companies in the industry when the investment is fully adjusted,compares the operating results of the target enterprise such as earnings per share,net assets per share and accumulated sales,and conducts multiple rounds of negotiations with the actual controller of the target enterprise to test the bottom line of the valuation and strive for a favorable transaction price.In recent years,due to the influence of China’s green development strategy,the product price of silicone enterprises fluctuates greatly,and the rapid iteration of products has a great impact on the enterprise’s benefits,thus affecting the enterprise’s net assets and market share.Using the market method to estimate the value,there will be great fluctuations in the enterprise’s valuation;Because the cost valuation method neglects the future profitability and growth of enterprises,it is not applicable to the valuation of enterprises in the silicone industry with rapid innovation and development;Although the income valuation method can reflect the intrinsic value of silicone enterprises,it is also not applicable to silicone enterprises because of the differences in product competitiveness caused by different innovation capabilities,the unstable cash flow under the rapid adjustment of market share and the difficulty in obtaining reliable data.From the perspective of empirical research,many scholars have found that information disclosure and enterprise value are significantly positively correlated[2].This thesis makes an in-depth study on the accounting information of GW company in a period that can be normally obtained.Inspired by Ohlson’s(1995)residual income pricing model and the value relevance of accounting information[3],this paper takes GW Company,the invested silicone R&D and production enterprise,as the research object,and establishes a "stock price linear regression"model to find the correlation coefficient between the stock price of listed companies and several variables by collecting historical data variables such as accounting information disclosed by nearly ten listed companies in the same industry,Then introduce the variable data of GW Company to calculate its share price,and demonstrate the applicability of linear regression model valuation method to GW Company’s valuation,and how to improve the relevant variables of GW Company to promote the growth of share price.This thesis introduces the model and finds that:the share price of GW company has a positive correlation with its net asset value per share,undistributed profits per share and gross profit margin,and a negative correlation with its R&D expenses per share.Among the variables,the stock price has the strongest sensitivity to the gross profit margin,which is consistent with the strong R&D and innovation ability of the enterprise as a competitive advantage.According to the research,further put forward relevant management suggestions on the resource profitability,core competitiveness and development strategy of GW company.