Research On Value Evaluation Of Listed Companies In Pharmaceutical Industry

China's capital market has always had the problems of inefficient allocation of resources and large fluctuation of stock price in securities market.The report of "NPC&CPPCC" in 2019 pointed out that we should reform and improve the basic system of capital market and promote the healthy and stable development of multi-level capital market.With the increasing attention of investors to the valuation problem,rational investment behavior will promote the stability of China's securities market.Valuation can not only give full play to the resource allocation function of the market,but also be of great significance to promote the healthy and stable development of China's capital market.This paper takes Yunnan Baiyao Company(000538.SZ)as an example for the valuation study which has been performing well and distributing out dividends for 20 years consecutively in China's securities market.This paper mainly compares and analyzes the dividend discount model(DDM)and the equity free cash flow discount model(FCFE)on the valuation effect of the company and the advantages and disadvantages of the model.Firstly,this paper compares various solutions to the sustainable growth rate in the dividend discount model,and selects the most suitable method to estimate the sustainable growth rate.Then through the market situation,industry trends,company fundamentals and other factors of the comprehensive consideration,select two-stage dividend discount model for Yunnan Baiyao Company's stock valuation.Record valuation results and perform sensitivity analysis.Then,using the previous analysis ideas,the two-stage equity free cash flow discount model is used to value the company's shares,and sensitivity analysis is carried out again.Furthermore,comparing the valuation results obtained from the two valuation models respectively.Different from the previous literature,this paper uses the quantitative investment strategy to test the valuation effect of the model by means of backtest,analyzing and comparing the validity of the two valuations.Finally,it is concluded that both models are of a certain scientific nature.Compared with the dividend discount model,the free cash flow discount model of equity is used to value the valuation of listed company shares,the valuation results are stable and reliable,which is more valuable in China's securities market.