Wolong Property Value Evaluation Research Based On EVA Model

With the continuous development of China’s economy,real estate has a pivotal role in the development of China’s national economy and has entered a period of rapid development in the 21 st century.In recent years,the real estate industry has entered a stable development mode.The premise of scientific and effective management of real estate enterprises is to understand the intrinsic value of the enterprise,and similarly,investors who want to invest in the enterprise also need to understand the value of the enterprise,and both are jointly concerned with the value of the enterprise.Therefore,the assessment of the value of the enterprise is a common concern for both real estate management and investors.The cost approach,the income approach and the market approach are the three commonly used methods of enterprise value assessment,but all three methods share a common disadvantage,that is,they do not take into account the cost of equity capital when assessing the value of an enterprise,which may result in the calculated valuation results not truly and accurately reflecting the operating conditions and enterprise value of the enterprise.Based on the shortcomings of the three methods mentioned above,the EVA valuation method is used in this paper to assess the value of real estate enterprises,which takes into account both the cost of debt and the cost of equity capital and can reflect the enterprise value more accurately and truly.EVA valuation method.The EVA method was initially used by scholars in China to evaluate the performance of enterprises,but as the research progressed,the application of EVA was not only limited to the analysis of performance evaluation,but also applied to the valuation of enterprises.This paper presents a unified discussion of the underlying theories of the cost,income and market approaches to enterprise value assessment,and analyses the advantages of the EVA model approach to real estate enterprise value assessment through comparison.Data from Wolong Real Estate’s historical annual reports are used to analyse the factors influencing Wolong Real Estate’s enterprise value through the content of value assessment theory,and to understand Wolong Real Estate’s financial position and operating level through the analysis of value influencing factors.Adjustments were made to the corresponding items of EVA,such as net operating profit after tax and total capital,taking into account the characteristics of Wolong Property’s own industry.The calculated historical EVA of Wolong Property is used to forecast future EVA and to calculate the enterprise value of Wolong Property at the base date.The share price of Wolong Real Estate on the base date was compared with the share price on the base date of the valuation model to conclude that Wolong Real Estate’s share price was undervalued.The reasonableness of the EVA valuation was also tested by selecting ten companies in the same industry and calculating the industry P/E ratio and P/N ratio.The EVA valuation method allows companies to accurately understand their own enterprise value,provides data to support accurate and efficient decision-making by management and investment by investors,and helps to enhance the value creation capability of companies.