Comparative Evaluation Of Yangtze Power Based On RIM And EVA Models

As a product of the Second Industrial Revolution,it is also an important part of the people’s livelihood plan.Electricity is not only related to the national economic lifeline,but also affects people’s daily lives.Therefore,effective value evaluation of power generation companies is of great significance to the steady development of the power industry,and it can also play a correct role in guiding the value identification of the power sector and even the national economy.Hydropower,as an important renewable clean energy source with a power generation ratio of 20%,plays an indispensable role in economic development.Compared with other power industries such as thermal power,photovoltaics and wind power,the hydropower industry has the characteristics of high natural monopoly,significant life cycle and strong cash flow.Therefore,based on the important position of the hydropower industry,the correct identification of its value is crucial.In reading the relevant literature on corporate value assessment,I learned about three major methods of asset value assessment.Among them,the income method is widely recognized by the market and analysts as an enterprise value assessment method.According to the discount principle in the income method,different indicators are discounted to develop multiple valuation models.In the following,according to the advantages and disadvantages of various methods,the RIM and EVA valuation models in the income method are selected to compare and analyze the corporate value of the hydropower industry.Then,this paper selects Yangtze Power,a leading company in the hydropower industry,as a case study object to evaluate the value of Yangtze Power at a certain point in time.By assuming that the historical data after this point in time is forecast data,the real and already occurring financial data is used in conjunction with the RIM and EVA valuation models to calculate its valuation.Finally,the four dimensions of the preliminary assumptions,processing,results,and applicability tests of the RIM model and the EVA model are compared,and the feasibility of the above two models for the valuation of hydropower enterprises represented by the Yangtze River Power is summarized.Compared with the EVA model,the model has the advantages of less predicted data,a simpler calculation process,and a closer valuation result to the stock price.This article takes Yangtze Power,a leading company in the hydropower industry,as an evaluation case.It has a positive reference for the evaluation of the intrinsic value of hydropower companies in China and the comparative study of RIM and EVA valuation.