Analysis Of The Enterprise Value Of Zhangzhou Pien Tze Huang Pharmaceutical Co., Ltd

Pharmaceutical industry is a significant component of economic growth.With the arrival of the aging society,the adjustment of the industrial structure and the reform of the new medicine system,the development of Chinese medicine industry and pharmaceutical enterprises is becoming increasingly important.Simultaneously,enormous opportunities are offered to those traditional Chinese medicine enterprises by the transformation of health concept and the integration of modern high technology.Compared with ordinary enterprises,some well-known traditional Chinese medicine enterprises have strong uniqueness in terms of their origin,product characteristics and applicable customers,which results in great divergence in the valuation of these enterprises.Therefore,this paper takes Zhangzhou Pianzaihuang Pharmaceutical Co.,Ltd,a typical representative of these topical enterprises,as the research object,then use various scientific and reasonable valuation methods to evaluate its enterprise value.The experience and inspiration obtained is expected to extended to other enterprises,which could provide reference for the establishment of the value evaluation system of the traditional Chinese medicine enterprises.In this paper,the historical performance of Pianzaihuang Co.is analyzed in detail,based on the connection between its cost of each item and the proportion of revenue,guided by the three stage growth model,aiming to make a reasonable forecast for its future performance.On the foundation of estimating the cost of capital,the model of Discounted Cash Flow(DCF)is used to calculated the value of Pianzaihuang Co..In addition,price earnings ratio is analyzed as well to calculate its value,so that the method of comparative analysis could be applied to discover the differences among these evaluation of results.The study shows that,for those traditional Chinese medicine enterprises that own unique products and large potential market,it is likely to underestimate the market value of such enterprises by using the cash flow discounted method,compared with the price-earnings ratio method.However,the industry price-earnings ratio rule is likely to overestimates the market value of such enterprises.