Valuation Of Chinese Listed Companies In Traditional Chinese Medicine Manufacturing Sector

In our country, the medicine is divided into traditional Chinese medicine and western medicine. Although they belong to the same industry, the public recognition of the value of the western medicine seems to be much better than traditional Chinese medicine. The value is internal, but the price is the performance of the market. Between the value and price of the game is to test the effectiveness and the rationality of the market. The author believes that the market value of traditional Chinese medicine not be better than western medicine, which seems to be dominated by an irrational value judgment. So the author put forward doubt whether the value of traditional Chinese medicine is to be underestimated.The traditional Chinese medicine is very broad, that contains a lot of sectors. According to industry classification in 2014, this article takes the 134 pharmaceutical manufacturing listed companies as the research object possessing more prominent marketization, which the traditional Chinese medicine manufacturing sector has 46 enterprises and the west pharmaceutical manufacturing sector occupies 88 companies.In the first place, this article analyzes the pharmaceutical manufacturing basic factors, and then compares the various financial indicators of the traditional Chinese medicine manufacturing enterprise with the western medicine manufacturing companies,even with the industry(for example the growth rate,return on invested capital and price earning ratio). This article discovers that the value of the traditional Chinese medicine manufacturing sector may be underestimated.According to the free cash flow of equity three phase model, this article can obtain the intrinsic value on December 31, 2014 that is the 46 listed companies of the traditional Chinese medicine manufacturing sector. At the same time, the intrinsic value of the total equity is higher than the total market value on December 31, 2014. So, this article concludes that the value of traditional Chinese medicine manufacturing sector is underestimated.