The Value Investment Analysis Under China's Current Situation

With the development of China economy,the majority of industrial enterprises,especially private enterprises,have accumulated a large number of surplus profits in the process of rapid development,but the lack of investment channels and poor financial credit environment resulted in the urgent needs of value investment of corporate profits surplus in China's situations.However,due to irregularities in China's stock market,value investment has been widely questioned.People hold different views on whether it is appropriate for enterprises to invest the profit surplus into the stock market.Based on the theory of value investment and analysis of stock market in China's situations,the paper expounds on the feasibility of value investment in the stock market in China,holding that it is practicable and necessary for the enterprises to carry out the value investment with the profit surplus in China's conditions.According to characteristics of China's stock market,on the basis of the theory of "intrinsic value" and "safety margin" in value investment,the paper suggests that according to the market researches and publicly revealed market information,investors can predict the profit and its growth of investment targets in the next 2-3 years.Besides,the average dynamic price-earnings ratio of the industry and PE valuation method can help predict the intrinsic value and its changing tendency of the investment target.As a result,the investment value of the investment target can be determined,and a convenient operation scheme is established for enterprises to carry out the value investment and risk control.Based on the selection of three cases of practicing value investment by the investment team of our department,the paper carries out the examination of feasibility and practicability of the program through the research on the company's development,the prediction of the intrinsic value,trading decisions,and risk prevention and control.The paper has made the contribution in the following respects: firstly,it puts forward the value investment plan for enterprises in China,believing that the key lies in how to accurately predict the intrinsic value of the enterprise.Secondly,it points out that decisions should be made through judgment of intrinsic value of the stock and prediction of its development trend.Thirdly,it further proposes to improve the safety margin of value investment in China's stock market by using the law of fluctuation in the stock market,and thus effectively control the investment risk.The research can provide reference for the securities investment department and individual investors to carry out the value investment in China's national situations.