A Case Analysis Of Zhifei Biotech Company Valuation Research

Nowadays, the new technology and new industry has developed rapidly. Which isgiving birth to a new industrial revolution. The new industry will be the most importantleading power of the economic and social development. Facing the present situation of therapid development of enterprises, the GEM market provides financing to those high-techenterprises which is lack of funds or has difficulties in financing. However, the majority ofthe society worried about the continue rising of the GEM. And also the over valued capitalmarket has becoming the focus of attention.Because of the different features of the high-tech enterprise, we should use a uniquemethod to assess the enterprise value. This paper selects Zhifei Biological TechnologyCo., Ltd. as a research subject which is a high-tech enterprises of the GEM, we usevaluation methods to assess the value of the company,and we will judge whether thecompany’s stock value is overrated, and whether it’s a bright decision to invest on thiscompany. In this thesis were define the enterprise value, and we believe that a company’svalue is generated from future cash flows which comes from the business operatingactivities, plus the value of the opportunity which is a potential profit, so the value of theenterprise can be divided into two parts, the value of existing investment sand the potentialvalue which comes from patented technology. In this thesis, we use FCFF model to assesthe existing value, and we use the technical divided assessment method to assess thepotential value. This study shows that in order to assess the value of the high-techenterprise of the GEM accurately, we should not only assess the existing value of thecompany, but also we should evaluate its potential value which comes from the futurepossible profit, and it will be more reasonable to considerate the two parts of the companywhen we start the valuation.