A Case Analysis Of Hubei Guangji Pharmaceutical Company Valuation Research

Company valuation is an important subject in the study of Corporate Finance. It is also the critical foundation for various financial decisions. Along with the economic globalization, the company acquisition activities are raising rapidly, which makes it essence to make the right price for the target company. Also, those managers, who are aiming to maximize their company value, make their daily operating decisions according to company valuation and those value-driving factors to achieve company growth. Therefore rational company valuation is very important both for company acquisition and guiding company's daily financial operation. Besides, company valuation also provides valuable guideline to investors for their investments in stock market.In this thesis , in order to apply company valuation theories and models into practice under current capital market circumstance, we balanced theory with practice and combined quantitative research with case study. A pharmaceutical listing company in Hu Bei province was selected as the case for our valuation research. By studying its history of development, current position in pharmaceutical industry, financial condition, competitive advantages, development strategies, ongoing developing projects and prospect of pharmaceutical industry, etc,we explained how this company efficiently explored company valuation and all the value-driving factors to grow up from a local small business to a leading enterprise in Vitamin industry. After that, the rigorous Free Cash Flow (FCFF) model was used as a primary tool to estimate the company's inner value, and The Economic Value Added model was used to study the yearly earning and those value-driving factors , the relative valuation method P/E was used to compare the company value to its competitors to further verify our study results.In summary, a good company valuation process is not a simple process to estimate the company value through mechanically collecting and organizing financial data and feeding them into all kinds of existing company valuation models. Actually, in order to have an objective and scientifically sound conclusion, we need take many practical considerations into account, use different valuation methods according to different kinds of target companies, discover any accounting exaggeration by carrying out in-depth research on company's economic fundamentals and the prospect for the whole industry, evaluate the effectiveness of the company's competition strategy, and properly choose every index variable.