The Valuation Analysis Of Shandong Gold Mining Co., Ltd.

Card Marx once said, "Gold is not naturally currency itself, but currency is naturally gold". Today, man has entered into 21st century, and prior to the Great Harmony of the world, just as Keynes, the famous western economist, said, there is no better substitute for gold as the ultimate guard and reserve for emergency. Gold deserves to be called "pride and hero in trouble times". Meanwhile, the commercial purpose of gold is constantly expanding, and there are boundless prospects for the gold industry.Recently, the price of precious metal has rose continuously because of the fear of worldwide resource's shortage . Especially for gold, its price hits historical record of around $600/oz in April. Gold industry has benefited from the rising gold price. And the A-shares of Shandong Gold has been pursued by lots of institutional investors as the one of two listed gold company in Shanghai Stock Exchange . In the background, the writer has the unique situation to find the event's essence by using the knowledge what the writer learned during the two years'MBA career . The writer makes the use of FCFF&PE model to forecast the future value of Shandong Gold. Finally, the writer draws the following conclusion to Shandong Gold:(1) the deficiency of perspective resource reserve;(2) the company performance mainly roots in external factor---the gold price;(3) the share price has exaggerated the company value; the writer advises that the investors should hold the money on the hands.There are six parts in this paper. Part 1 introduces the basis information and the ownership innovation of Shandong Gold; Part 2 makes an industry analysis of world & China civil gold industry, focus on supply-demand analysis to explain what's driving gold ; Chapter 3 is Shandong Gold financial analysis. Based on Shandong Gold annual reports from the fical year of 2003 till 2005, the paper analysis it's account quality and financial data, then make a financeappraisal; Chapter 4 is the financial policy analysis of Shandong Gold; Chapter 5 is the stock valuation of Shandong Gold. By using Free Cash Flow (FCFF) Model and Price Earning(PE) Model, the paper makes the valuation of the company; Chapter 6 evaluates the risk of Shandong Gold ,including the financial risk, business risk and so on. Finally the writer draw the conclusion and make an investment suggestion, based on the above chapters'analysis.