A Study On Evaluation Of Listed Companies In Growth Enterprise Market Based On The "Combination Method"

After ten year’s preparing, Chinese GEM finally opened in Oct.30,2009. It’s very popular in theinvestors. Corporations listed on GEM have a high IPO price and PE. If the investors continue to use PE tocalculate the corporate value, they’ll ignore its high risk and it’ll be hard to keep rational. Compared withcorporations listed on the main board, corporations listed on the GEM have a greater volatility. So thetraditional method cannot reflect its great volatility completely. The paper is trying to explore a methodwhich will apply to appraise corporations listed on GEM, so that investors will know the value and risk of acorporate more clearly, and they can also be rational when invest money in stocks. And then we can avoidcopycat and hype, standardize the investment market and maintain the stable development in the stockmarket.The paper introduces some newly theories and methods about corporate valuation simply, and makecomparison and analysis on the valuation methods. In order to know the possible difficulties exist invaluation of the listed corporations on GEM, it analyzes the characteristics of the corporations listed onGEM, which include its positioning, high uncertainty, unsound organizations, high proportion of intangibleassets, new equity structure and so on. Finally, it use the method combined by the discounted cash flowmodel and the real option model. The traditional method is used to appraise the actual value of thecorporations listed on the GEM, however, the real option model is a supplementary method to appraise thepotential value.In order to examine whether the "combination method" is applied to evaluate the corporations listedon GEM, the paper chooses "the stock of Xinyan(300159)" from GEM as an example finally. First, itanalyze the fundamentals of "the stock of Xinyan", which include its industry development, corecompetition advantage, operation situation and so on. So that it can provide some basis for estimatingrelevant parameters lately in the part of case study. Secondly, we use the discounted cash flow to appraisethe corporate value, and use the real option model as a supplementary method to appraise the potentialvalue. At last, the paper explore the relationship among the corporate value, which concludes the potentialvalue and the market value, in order to examine its applicability.Finally, it comes to the conclusions and the shortage of this paper. According to this paper, the value ofcorporations listed on GEM is consist of the potential value and the value of the assets. This paper alsoprovide some advise when evaluating, such as hold the fundamentals of a corporate tight, and assess thegrowth carefully.What’s more, it has some shortcomings in choosing the relevant parameters.