Intrinsic Value Evaluation Of China Merchants Bank Based On Residual Income Method

With the continuous improvement of residents’ income,the increasingly reasonable behavior of investment and financial management,and the gradual maturity of China’s capital market,listed commercial banks often attract investors’ attention due to their large assets,deep foundations,and strong business capabilities.However,in recent years,the continuous opening of China’s capital market and financial market,fierce interbank competition in the banking industry,marketization of interest rates,and financial disintermediation have affected the commercial banks whose profit margins are the main profits.As of the end of 2018,there were 31 listed banks in the A-share market.Whether these bank shares still have investment value and whether expected returns can be realized is the core issue that investors are most concerned about.Therefore,it is very important to carry out scientific and reasonable value evaluation on commercial banks in the current era and find a value evaluation model suitable for China’s commercial banks.Through the evaluation of the intrinsic value of commercial banks,on the one hand,they formally answered investors’ doubts about whether commercial banks still have investment value,and helped them form the correct stock judgment method and investment awareness;on the other hand,they helped commercial bank managers find the intrinsic value The driving factors are to formulate future business development strategies,find future profit models,and then increase intrinsic value.Based on literature research,from the aspects of business model,asset and liability structure,risk,and supervision,analyze and summarize the particularities of the banking industry,and find that the market method,cost method,income method,and option method are not applicable to the valuation of commercial banks.Therefore,a residual income model is introduced.This article introduces the basic form of the residual income model,introduces an improved DuPont financial analysis system during the clear forecast period,and combines the specificity of commercial banks and factors affecting intrinsic value to modify the sales revenue and net sales margin in the model to calculate business.The bank’s residual income,while using the dynamic NS model to calculate the dynamic risk-free return rate,makes the determination of the return rate more in line with the dynamic changes of the market.This study also draws on a three-phase residual income model that includes risk factors,and establishes the relationship between the value assessment after the clear forecast period and the financial data during the clear forecast period,and solves the difficulty of predicting the data after the clear forecast period and the difficulty of summing infinite polynomials.The calculation problem enhances the accuracy of the enterprise value calculation after the clear forecast period.Put the improved residual income model into practice.Taking China Merchants Bank as a case,starting from the intrinsic value influencing factors,the residual value model was usedto calculate the internal value of China Merchants Bank on December 28,2018,and compared with the actual stock price to determine whether its value was undervalued.Based on the above calculation results,an evaluation conclusion is drawn that the market fails to reflect the true value of China Merchants Bank,its value is seriously underestimated,and there is still a strong residual income in the future,which has long-term investment value.It is recommended that investors purchase and manage China Merchants Bank And bank stock investors make recommendations.The whole process has its rationality and deficiencies,and it is expected that scholars will continue to improve.