Value Assessment Of Heng Rui Based On Free Cash Flow And Value-driven Perspective

With the active capital market,the maximization of enterprise value has become the focus of shareholders,management and investors.In the process of each industry becoming mature and standardized,the industry "shuffle",mergers and acquisitions,equity transfer and other capital transactions are in full swing,investors and management also pay more attention to the enterprise value evaluation method and enterprise value creation path.This paper USES the free cash flow method to evaluate the enterprise value,and analyzes the value drivers on this basis,so as to propose the path of enterprise value creation according to the main sensitivity factors of value drivers.This paper starts from the theory,method and research status of enterprise value assessment and value driving factors.By comparing and analyzing the ideas and advantages and disadvantages of various valuation methods,it is concluded that the free cash flow discount method is more scientific and applicable.Then,the principle and defects of the method are introduced,and some Suggestions are put forward to make the discount rate dynamic.After that,it introduces the development of Heng Rui pharmaceutical and the current pharmaceutical manufacturing industry,and analyzes the reasons for the market recognition of its enterprise value.Paper based on free cash flow discount model Heng Rui pharmaceutical value for the comprehensive and detailed evaluation,through operating and financial data on history and the future development trend is analyzed,and then predict H eng Rui pharmaceutical future performance and other related parameters,calculation of free cash flow,estimate Heng Rui pharmaceutical enterprise value,control evaluation point,the market value of variance analysis.Based on the evaluation of enterprise value by free cash flow method,this paper combines the evaluation process and the parameters of free cash flow,and finds out the main value drivers related to free cash flo w through sensitivity analysis.(1)operating income;(2)operating costs;(3)sales expenses;(4)administrative expenses;(5)sustained growth rate;(6)R&D expenditure.According to these value-driven sensitivities,this paper analyzes the six difficulties that Heng Rui pharmaceutical faces in increasing its value :(1)over-reliance on "generic drug" product structure;(2)slow pace of "internationalization";(3)soaring procurement costs;(4)high sales and administrative expenses;(5)weak capacity for sustainable growth;(6)R&D risks and costs continue to increase.In view of the main sensitivity factors driven by value and the dilemma of value creation faced by Heng Rui pharmaceutical,this paper proposes Suggestions to the management of the enterprise :(1)get rid of the dependence on "generic drugs" model;(2)expand the growth space of overseas revenue;(3)self-sufficiency of API and reduction of procurement cost;(4)control costs and reduce fees and optimize the sales system;(5)optimize quality management and capital structure;(6)cost reduction and efficiency enhancement in R&D.