Enterprise Value Evaluation Of Feed Industry Based On FCFF Model

"Much starker choices-and graver consequences-in" period,with the expansion of the livestock demand,and a series of policies to promote the development of feed industry have issued,from dramatic growth after the feed enterprises,a large number of inefficient capacity with among them,until now to scale and intensive process of gradually,down from their 16454 peak of total feed industry enterprises in 2015 to more than 6000,feed enterprises will further differentiation in the future.In such a competitive background,industry reshuffle,the selection of the appropriate method for enterprise value evaluation is crucial for investors.In this paper,the FCFF method is used to evaluate haida group,so as to find a method suitable for the valuation of feed enterprises.Based on the analysis of the industry environment and the internal environment of haida group,this paper analyzes the factors affecting the valuation of haida group.In the analysis of the industry environment,it is found that the feed industry has the characteristics of slowing output growth,increasing industrial concentration and fierce competition.Starting from four perspectives of financial status,research and development ability,management ability and tax policy,this paper analyzes the influence factors of the internal environment of haida group on the valuation,as well as the influence of these factors on the enterprise value.The discount period is set to be a seven-year forecast period and a perpetual period.Based on the analysis of financial data from 2014 to 2018,combined with the above industry environment and enterprise environment characteristics,the free cash flow can be obtained through the prediction of future financial data.The weighted average cost of capital method is used to determine the discount rate,and the discount rate is used to discount the free cash flow in the forecast period and the sustainable period to obtain the enterprise value of haida group.Finally,the results of the four methods,namely market value,FCFF,price-to-book ratio and price-to-book ratio,are compared and verified.The following conclusions are drawn through the analysis of this paper :(1)FCFF model is suitable for the valuation of feed enterprises and is more accurate than the market method.The FCFF valuation of haida group is the closest to the current market price.(2)there are two possible risks in the valuation of FCFF model.First,the enterprise financial data has a certain volatility;Second,China's stock market is not yet mature,stock price fluctuations will be affected by multiple factors.(3)the valuation of FCFF model has limitations.First,the limitations of the model itself,the parameter selection method is not clearly defined,and it is very arbitrary;Second,the valuation results will be affected by subjective judgment.Finally,Suggestions are put forward for investors,industry management departments and feed enterprises.Investors should select appropriate evaluation methods after fully considering the industry environment and the internal environment of the enterprise to ensure the accuracy of the valuation results;The evaluation management department shall establish rules for selecting parameters in the FCFF model;Feed enterprises can enhance enterprise value from four aspects: merger of upstream and downstream enterprises,innovation of management system,improvement of research and development level and strengthening of brand building.