A Study On The Valuation Of Hydropower Enterprises Based On Income Method And Market Method

Since the reform of the power system in 2002,the power plant network has been separated from power grid in the power system.The power generation enterprises and power grid enterprises have been reorganized.Basically,there are five major power groups and two power grids enterprises in China.With the power shortage,the five major power groups are staking their horses and the domestic power construction enters the peak period.As a subsidiary of large energy-based state-owned enterprises,Huaneng Hydropower got the overall development right of the Lancang River with the support of the government.After more than ten years of construction,the basic development of midstream and downstream of the Lancang River has been completed.The ongoing development of the upstream of the Lancang River in Yunnan and Tibet is under way.Huaneng Hydropower launched its listing work in the context of rising profits every year.It applied to the SFC for listing as a whole and achieved whole listing in the Shanghai Stock Exchange in the end of 2017.However,there has been a lot of surplus in the power market in Yunnan and the whole China since 2015.Power generation enterprises have difficulties in sales of electricity and the operating show a steep decline.In addition,the construction cost of upstream hydropower stations in Yunnan section of the Lancang River is much higher than that of the downstream.When those hydropower stations are put into operation,there will be a large number of fixed depreciation costs and financial costs.But the overall market cake is limited.Whether the power station newly put into operation can expand the sales market or divide Huaneng Hydropower existing market remains in doubt.In this situation,how much is Huaneng Hydropower valuation? Is there enough investment value? Those are questions need for detailed analysis.As the economy in China continues to deepen its reform,there are more and more business transactions in mergers and acquisitions,stock issuance,asset restructuring and other aspects of economic transactions.The scope and depth of the application of corporate valuation continues to increase.Valuation method is the core issue of corporate valuation.After continuous theoretical breakthrough and practice verification in China and abroad,valuation accuracy is also improving.Valuation in China and abroad are maturing.This article systematically introduces the basic theoretical logic of the three evaluation methods in practice evaluation,the advantages and disadvantages as well as the problems should be noted in the assessment.At the same time,it introduces the history of the development of hydropower in China and abroad.Select the appropriate valuation method and the appropriate comparable value multiplier by analyzing the financial statements of Huaneng Hydropower.Make evaluation of Huaneng Hydropower through the discounted cash flow method,P/B,P/E and EBITDAB multiple in comparable method,market value per kilowatt installed capacity.Make the analysis of the valuation results and draw conclusions and shortcomings.