Evaluation Of The Stock Of ICBC

In China, the banking sector is the core of financial markets for investment andfinancing. Since2005, with the split share structure reforms, China’s banking sector hasa great opportunity of development. As one of state-owned Big4commercial banks,Industrial and Commercial Bank of China, which is China’s largest commercial bank,has been a leader in the banking industry. However, since2008, with the continuousspread of the financial crisis, China’s state-owned commercial bank’s stock prices alsosuffered fluctuations. The issue of whether the state-owned commercial bank is "firesale" has debated among people who are concerned about it. In such a background, thispaper uses the Western theories which are more commonly used to evaluate the stock ofICBC, in order to give the investors a reference value for investment decision.In this paper, a large number of studies related outcomes at home and abroad, based ona large collection of China’s banking sector, as well as ICBC, under the guidance of thebasic theory, using a macro analysis, industry analysis, company analysis, ratio analysis,valuation analysis, risk analysis and other methods for processing these data toestimate the range of ICBC’s stock price. There are seven chapters to analyze thevaluation of ICBC: The First Chapter, the introduction. Explain the sources, background,the basis, the aim and meaning. The Second Chapter, review and theoretical basis.Introduce the discounted cash flow model for free cash flow, relative valuations model,residual income theory, the capital asset pricing model and the review of ICBC. Chapter3, current situation and investment environment analysis of ICBC. Through the analysisof macroeconomic, industry, and ICBC, operating situation and investment environmentare introduced. The fourth chapter, the ratio analysis of ICBC. ICBC’s scale,development ability, asset quality, liquidity, profitability and core capital adequacy ratiois summarized. Chapter5, valuation of ICBC. Using equity free cash flow model,relative valuation model and residual income model to estimate the value of ICBC toconclude that the value of stock is4.93yuan. The sixth chapter, risk analysis of ICBC.Describes some of the major companies face the risk. Chapter7, conclusions andrecommendations. Summarize this paper. We conclude that we should use differentmethods to estimate the stock price, which is4.93yuan.