A Study Of The Value Assessment Of Electric Power Listing Corporation Based On Economic Value Added

The power industry is an indispensable part of China's national economic and social development of which the listed power companies are representative.With the deepening of the state power reform and the continuous introduction of various policies by the government,the power market is under a vigorous transformation.A series of activities such as mergers and acquisitions,reorganization of assets,and financing have also intensified.Both external investors and business management are in urgent need of a set of scientific and rational enterprise valuation methods as the basis for investment and operation management.The EVA concept based on residual income or economic profit has been a benchmark for business performance valuation for more than 200 years.EVA is short for the model of Economic Value Added,first proposed by Stern Stewart Consulting Company in 1990.Since it overcomes the shortcomings of conventional indicators and accurately reflects the value created by the company for shareholders within a certain period of time,it has been widely popularized and applied in various countries in the world since the mid-1990s.Meanwhile,the EVA indicator has also become a new type of performance measure commonly used by companies.As in our country,the application of EVA valuation model is still in the developing stage,this paper attempts to apply the EVA model to the business valuation of the listed power companies.Through explicating the connotation of enterprise value and valuation,this article makes a comparative analysis of the three major conventional valuation methods,the cost method,the market method and the income method.On the basis of residual income,the article,combining the characteristics of the power company with the development trend and the macroeconomic environment in which the company is located,confirms the applicability and superiority of the EVA method in the valuation of the listed power companies.At the same time,employing the Stewart's EVA formula,this article makes a number of instructions on the adjustment of various indicators.In the section of case analysis,Huaneng Power International Co.,Ltd.,one of the top five listed power companies,is selected as the assessment subject.Based on its 2012-2016 consolidated financial statements,the paper assesses historical EVA values,forecasts its 2017-2021 income statement,and calculates the relevant data of total capital cost.The paper figures out,on the one hand,the 2017-2021 EVA value through the adjustment of various data and on the other,Huaneng Power's corporate value through EVA's three-stage model.Finally,the assessment and analysis of the evaluation results show that the EVA value assessment model is well able to assess the intrinsic value of the enterprise and is instructive to both investors and operations managers.