Valuation Study Of Chinese Internet Company Based On EVA Valuation Model

With the rapid growth of internet industry, property trading activities among internet companies have flourished, such as listing,merging and restructuring,seeking venture capital, etc. One of the core issues is the internet company's evaluation. As a new organization, scale effect is extremely important to internet company development, for only reaching a certain size can the company gets increased in its profit. However, large capital investment is in need as the company expands its size, and because of high risk, the usual financing channel for internet company is equity financing. So, the most important thing in evaluating an internet company is shareholder's value, and traditional valuation model, which pay much attention to accounting indicators show their limitations.Based on above-mentioned background, I try to use EVA to value internet companies. The biggest advantage of EVA indicator is that it values the company on the behalf shareholder's interests, and pays much attention on companies' growth and profitability. The paper starts with the specificities of internet companies, and focus on applying EVA valuation model to internet companies. The main methodology employed is case-based empirical study, and comparative analysis between EVA, DCF and P/E valuation model is also used to show the priority of EVA in internet companies' evaluation. The result shows that EVA model makes the best estimate.The whole paper contains five parts. The first part is introduction and research frame. The second part is the definition and characteristics of internet companies. The third part is the expounding of EVA theory. In this part, EVA is compared with normal valuation theory and popular valuation model of internet companies. The fourth part is the pivot of the paper, it applies EVA valuation model to estimate the value of NetEase Inc. The final part is the conclusion and limitations of the research.