Valuation of the Company by Selected Methods

Tiantian Kong

Master's thesis

Abstract:

The main goal of this thesis is using the classic theory of enterprise value, the method of investigation and case studying to value a listed company, Dongfeng Motor Group. There are included into five parts in this thesis. First part, introduction is mainly showing the general structure and contents of this thesis, and it help to build a better understanding and learn how important the valuation is. Then the main valuation methodology part is followed. In this part, we will know how to value a company step by step. First at all, we will explain three kinds of ratio, solvency ratio analysis, liquidity ratio analysis and profitability ratio analysis in order to research the financial situation. Then we will choose the best suitable model to value the company after we analyze the financial situation. Third chapter is to describe the situation of the company. First as all, we will introduce the basic situation of Dongfeng automobile company. And according to analyze the development of domestic industry environment and international environment, we will study the present situation and future trend of domestic and global automobile industry. Comparing Dongfeng with other domestic and international auto companies, such as assets, profits, market shares and so on, we will know the disadvantage of the company and competitive advantage, then position future development. Chapter four is application of valuating the company. We will choose four years historic data from year 2009 to year 2012 and predict next six years in the future to calculate and analyze the financial situation. In this chapter, we will firstly use regression model to build up linear regression function to predict the trend of two variables, revenue of the company and GDP in China. Then we are able to predict each component of the balance sheet and income statement by comparing each items with the revenue. According to discounted cash flow model, we will have a valuation of the company. Furthermore, we will research more how the value change when we change other selected and important components due to sensitivity analysis. Last chapter is to conclude the company. We will discuss and summarize the results we have got, present the future steps and development.

Abstract:

The main goal of this thesis is using the classic theory of enterprise value, the method of investigation and case studying to value a listed company, Dongfeng Motor Group. There are included into five parts in this thesis. First part, introduction is mainly showing the general structure and contents of this thesis, and it help to build a better understanding and learn how important the valuation is. Then the main valuation methodology part is followed. In this part, we will know how to value a company step by step. First at all, we will explain three kinds of ratio, solvency ratio analysis, liquidity ratio analysis and profitability ratio analysis in order to research the financial situation. Then we will choose the best suitable model to value the company after we analyze the financial situation. Third chapter is to describe the situation of the company. First as all, we will introduce the basic situation of Dongfeng automobile company. And according to analyze the development of domestic industry environment and international environment, we will study the present situation and future trend of domestic and global automobile industry. Comparing Dongfeng with other domestic and international auto companies, such as assets, profits, market shares and so on, we will know the disadvantage of the company and competitive advantage, then position future development. Chapter four is application of valuating the company. We will choose four years historic data from year 2009 to year 2012 and predict next six years in the future to calculate and analyze the financial situation. In this chapter, we will firstly use regression model to build up linear regression function to predict the trend of two variables, revenue of the company and GDP in China. Then we are able to predict each component of the balance sheet and income statement by comparing each items with the revenue. According to discounted cash flow model, we will have a valuation of the company. Furthermore, we will research more how the value change when we change other selected and important components due to sensitivity analysis. Last chapter is to conclude the company. We will discuss and summarize the results we have got, present the future steps and development.

Keywords

Dongfeng, valuation, income approach, financial analysis, sensitivity analysis

Keywords

Dongfeng, valuation, income approach, financial analysis, sensitivity analysis

Language used: English

Date on which the thesis was submitted / produced: 25. 4. 2014

Thesis defence

• Date of defence: 28. 5. 2014
• Supervisor: Miroslav Čulík
• Reader: Aleš Kresta

VŠB - Technical University of Ostrava

Ekonomická fakulta

Master programme / field:
Hospodářská politika a správa / Finance