Research On Evaluation Of Non-performing Asset "KK Building" In HQ Bank

HQ Bank is large-scale commercial bank. At present, it is necessary to mange largequantities of non-performing assets. Units01-10on17-18/F of “KK Building”(hereinafterreferred to as capitals for debt payment of “KK Building”) are material non-performing assetsof HQ Bank. Main significances for the research on disposal pricing of capitals “KKBuilding” are assisting HQ Bank in formulating disposal pricing of capitals for debt paymentof “KK Building” objectively and reasonably, so as to provide bases for the followingdisposal decision of HQ Bank. And at the same time, a set of more objective, simple, andconvenient pricing methods can be researched to provide references for pricing of moresimilar non-performing assets of HQ Bank.Firstly, current situations for disposal pricing of HQ Bank on capitals for debt paymentof “KK Building” are discussed; secondly, capitals for debt payment of “KK Building” areassessed and analyzed with the use of theory of asset appraisal and theory of asset value;thirdly, appraisal results are revised and final pricing results are gained according to disposalrisks of such capitals for debt payment and tax types; and finally, suggestions for disposalpricing of material non-performing assets of HQ Bank are proposed and disposal pricing flowchart of material non-performing assets is formulated.Through analysis on current situations for capitals for debt payment of “KK Building”,on one hand, existing problems of original pricing flow of HQ Bank are found, includingapplicability of expert price-negotiation method to HQ Bank, ignorance of fact-finding onmarket cases, insufficient revision on appraisal objects and market cases, insufficientformation bases for appraisal method weights, reasonable justification on appraisal resultsbecoming formalistic, and lack of influences of quantitative factors on pricing; on the otherhand, there are many practical situations, such as post level of employees engaged in assetsappraisal and pricing work in HQ Bank is general, employees with higher education havefewer working experiences in assets disposal, employees with lower education have moreworking experiences in assets disposal, and employees have relatively few material appraisalexperiences. Such conclusions have provided bases for researching disposal pricing forcapitals for debt payment of “KK Building”.Through selection and analysis on appraisal methods, findings are as follows: appraisalmethods adapting to HQ Bank are market comparison method, cost method, and incomemethod; appraisal methods adapting to capitals for debt payment of “KK Building” aremarket comparison method and income method; results of market comparison method and income method are selected again according to value types reflected by such two methods,selection criteria: when results of market comparison method are higher than that of incomemethod, results of market comparison method can be used directly, on the contrary, results ofmarket comparison method shall be used as the appraised price. It is necessary to dig assetvalues that have not been discovered in the market, so that actual transaction price can closeto results of income method as possible. Via related calculation, results of market comparisonmethod of capitals for debt payment of “KK Building” is RMB37.66million Yuan, while thatof income method is RMB12.78million Yuan, and results of market comparison method isbigger than that of income method, so RMB37.66million Yuan, results of market comparisonmethod, shall be regarded as the appraised price of capitals for debt payment of “KKBuilding”.Through analysis on influences of disposal risks and taxes on pricing, on one hand, indisposal risks, main risk points of such capitals for debt payment are mainly uncertainty ofassets transfer, market response of unfinished buildings, and bidding results of whole disposal,and then the following results are gained: uncertain risk of assets transfer is RMB0.23millionYuan, uncertain risk for market response of unfinished buildings is RMB3.01million Yuan,and the appraised result after risk revision is RMB34.42million Yuan; on the other hand, intax analysis, the appraise revised result is RMB29.30million Yuan under the condition thattaxes are paid respectively, while the appraise revised result is RMB30.20million Yuan,whichever is higher, so the final pricing result of capitals for debt payment of “KK Building”is RMB30.20million Yuan.And finally, suggestions on pricing of material non-performing assets towards HQ Bankis proposed, including bringing reference cases into due diligence scope, appraisal towardsassets with the use of market comparison method, income method, and cost method, refiningcase revision standards, change of appraisal methods and weight calculation method, andinfluences of disposal risks and taxes on pricing. And at the same time, disposal pricing flowchart of material non-performing assets is formulated and appraised price for more similarassets are assisted by HQ Bank according to practical situations for disposal structure of HQBank.