HT Company Value Analysis

This paper examines the valuation model used for company listed in China’s stock market. Chinese stock market goes through rapid growth since the establishment of Shanghai and Shenzhen Securities Exchanges in 1990 and 1991 respectively. Both the number of companies listed and market capitalization were rocketed in the last two decades.As one of the main investment channel available to investors in China, stock market plays a significant role in China’s financial market. For investors who want to increase their wealth by investing in stock market, investment return is determined by the performance of shares. How to choose the best performance shares become the key issue.Technical analysis and fundamental analysis are two main approaches used to make investment decisions in financial markets. Technical analysts believe that stock price reflects all information related to the shares; Furthermore, price moves in trends and the history tends to repeat in future. As result, investors should only focus on the price movement of a security and try to predict the trend of price movement by analyzing all historical market activity data.In contrast, fundamental analysts hold the view that stock price moves around the intrinsic value (which measures the actual value of the company). The stock price tends to move back to intrinsic value if it’s far from the stock’s real value. The stock is undervalued if the stock price is less than intrinsic value, and vice versa. Investors should buy undervalued stock and sell overvalued stock. Therefore, investors should examine every relative factor that may have impact on intrinsic value and calculate the intrinsic value of the stock.As the market became more efficient through time, fundamental analysis nowadays became the main stream approach used in Wall Street. Sophisticated investors in China should be more familiar with it and use it in their investment decision making.This paper focuses on Chinese stock market and aim to provide a systematic valuation model which examine both qualitative and quantitative aspects and can be used by fundamental analyst for their investment decision making in China’s stock market. This essay will use HT as an example to demonstrate how to use the valuation model in real situation.