Investment Value Of The South China Sea Development Corporation

It has been five years since Chinese government begin to reform the urban water industry system in 2002. From then on, the private and foreign capital was permitted to enter the market. The water price is being increased to cover the cost of engineering and environment protection, and to offer reasonable profit to investor. So it is active that private investors invest the water industry of China which has a great deal of market capacity.It is an important issue that How to price the water company in acquisition, because it is being argued that acquisition price was several times more than the net asset price recently.This paper analyzes the value of Nanhai Development Company, which is a water service company and was listed in China Shanghai stock market.Based on macroscopical viewing, the paper studies the following issues and makes clear the great investment value in water industry. These issues: the character of water industry; the summarizer of water industry in Britain, France and America; reviewing the road of water industry reformed in China; analyzing the current competitor and the method of investment and financing in Chinese water industry.Then, the paper introduces the Naihai Development Company which lies on Nanhai City. The Company was valued by Relative Valuation Model and Cash Flow Discounting Model. With finance analysis and sensitivity analysis, the company purchasing price and range are given. At the same time, the paper studies the reasonable number of return of investment(ROI) and WACC in Chinese water industry, and also gives the models that how to forecast the urban water volume and price.These researches will is helpful to merge and acquire water-company, and helpful to appraise the new water project.