Analysis Of The Intrinsic Value Of The Growth Of Listed Companies In China

The Chinese financial industry will open gradually after China joined the WTO, and the Chinese stock market also will be gradually maturing, the value based investment will occupy the predominant position in the future. This thesis study at the listed company in the Chinese stock market how to look out the growth type enterprise of having the investment value to provide the investor to make decision for investment.EVA evaluation model that this thesis main contents is an argument which is based on Economic Value the Added (EVA) theories, also this thesis compare the EVA evaluation model with other evaluation model, and try to proof that model can be used as a kind of the new method of evaluating the intrinsic value of listed growth type company.The application of the EVA concept recently rise gradually in the United States and the other west countries, the governor and investor adopt it to measure the management performance, and use it as an indicator to repay the manager's working accomplishment. The Economic Value Added (EVA) is a measure of surplus value created on an investment, namely the difference in amount after the NOPAT (net operating profit after taxes) subtract cost of capital. The formula is:EVA= NOPAT - WACC × (Debt Cost + Cost of Equity)The theories foundation of the EVA evaluation model is that the intrinsic value of a company equal to sum of the discounted future EVA of the company and total investment of the company. EVA is the company's surplus income. If the returns of investor equal to the expectation income, the surplus income of company will be zero and the value of the investment will equal to the amount of investment. If the company increases EVA, the intrinsic value of a company will equal to sum of the discounted future EVA of the company and total investment of the company. The formula is:Company's Intrinsic Value = Total Investment + Discounted Future EVADiscounted Future EVA =This thesis studied evaluation of the Qingdaohaier and Foshanzhaoming, two typical growth type listed companies. To compared the EVA evaluation model with other discounted cash flow model, it was discovered that the discounted dividend model and the discounted free cash flow model are all existing the weakness whose the future cash flow is difficult to estimate because of fluctuate of the cash flow. But The Economic Value Added (EVA), because of only considering the cost ofinvestment not the total investment, does not exist exquisite fluctuate, therefore it is very convenient to forecast the future EVA flow by statistic analysis.Therefore, the writer think the EVA evaluation model have good maneuverability and accuracy, and can be used for evaluation of the Chinese listed company, at the same time that model also can apply in capital evaluation in company's mergers & acquisitions and recapitalization.