China’s Internet Company Valuation Based On Dcf Model

As a high technology industry, internet has characteristics of high-risk and high-growth. How to measure internet company value is the core issue in the internet financing market.It is an urgent need to set a scientific system of Internet company valuation to promote internet company finacing activities,such as seeking venture capital、merging and IPO.In this paper, based on the analysis of five major valuation models theory and their applicability analyses, combined with analysis of China’s Internet industry characteristics, I select the most representative Internet company Tencent as a case study with the most rigorous theoretical basis DCF model to make company valuation. Firstly, I comprehend Tencent financial situation through comparative analysis of Financial indexes and make strategic analysis by using the Boston Consulting Group Matrix model.Secondly,based on Financial and strategic analysis,I get he basis for relevant variable and assumptions of valuation. Thirdly, making Tencent free cash flow estimates. Forthly, using regression model I complete a risk factor (3and WACC computing.Lastly,I complete Tencent valuation based on DCF model and make the results of verification by the results which is based on the comparative valuation.Finally, I hope to increase internet company probability-weighted valuation analysis and the flexibility valuation expectations in the traditional DCF model in my future study.I wish that can promote DCF model Application in China’s Internet companies.