Study On Value Investing Based On Discounted Free Cash Flow Method

With the establishment of science and technology innovation board in Chinese capital market and the implementation of comprehensive registration system,the securities market has stimulated a round of vitality and brought more investors to join.Accurately assessing the value of a company is of great significance to both managers and investors.In the current situation of the world’s largest shortage of electronic chips,as the China’s largest,most advanced technology,most complete equipment,and largest multinational chip production enterprise--Semiconductor International IC Manufacturing Co.,LTD.(hereinafter referred to as "Semiconductor International",688981)has a unique position in our country’s semiconductor industry.It is of great practical significance to study its investment value.Therefore,the thesis selected SMIC International and conducted a detailed analysis of SMIC’s industrial background,and use data to interpret the industry’s competitive landscape and future development trends to more intuitively reflect SMIC’s position and influence in the industry.Based on the financial report data of SMIC from 2017 to 2021,the current internal financial situation of the company is obtained through fundamental analysis and financial analysis.It is judged that its profitability continues to increase and it is in a period of rapid development.Its debt ratio is declining year by year,its debt repayment risk is small,its operation capacity is stable,and the efficiency of using funds is significantly enhanced.Both revenue and growth have been improved.Then,using the free cash flow model of the absolute valuation method to calculate the intrinsic value of SMIC stock is 78.65 yuan per share,which is higher than the current market price,drawing the conclusion that SMIC has a strong investment value.This study is helpful for the majority of investors to have a clear understanding of the company and form the better investment decision.In addition,in view of the current situation of SMIC,suggestions are put forward to improve research and development capability,expand production capacity,increase market share,reduce costs,improve operating profit and enhance the value of talents,promote the value of the enterprise,and provide useful reference for the valuation of similar enterprises on the Science and Technology Innovation Board.