High-tech enterprise valuation and Pricing Analysis

[Abstract] GEM has been established to broaden the financing channels for hi-tech enterprises, and promote the development of high-tech enterprise, but in recent years, the GEM in the issue price of high-tech companies in general are too high, which is not conducive to the normal operation of the GEM, more damage to the interests of investors. Correct assessment of enterprise value, appraised value of the convergence of the objective value of the enterprise, helps GEM, investors and the orderly development of their own the article describes the high-tech companies in the difficulties of valuation, compared to high-tech enterprise valuation theoretical methods to explore high-tech enterprises in the valuation and pricing issues that need attention.

[Keywords:] high-tech enterprise, valuation, pricing

As of December 31, 2010, GEM has listed more than a year, listed companies reached 153, up to 78.53 times average earnings, up even to 106.04 times the issue price generally is too high, the market value of companies and enterprises over the intrinsic value of deviation , and this not only damages the Economic interests of investors, but also affected the normal operation of the GEM, so companies will face certain risks. properly assess the intrinsic value of high-tech enterprise, the enterprise value of the stock price fluctuations around the assessment, contribute to sustainable development of enterprises and the orderly operation of the GEM.


A high-tech enterprise valuation and pricing of the significance of

In the field of management, the enterprise value is defined as a special commodity for business, follow the law of value, the value of the core through to the management, so that all corporate stakeholders (including shareholders, creditors, managers, ordinary employees, government and other can be satisfied with the ability to return. business value through enterprise in the market to maintain a strong competitive edge, is reflected in the sustainable development process to obtain future profitability.

Business valuation is that investors or securities firms to adopt scientific methods for assessment, the fair market value of the enterprise to analyze and measure. Enterprise valuation significance, embodied in the following two aspects: within the enterprise, business valuation, as corporate strategy and corporate property of the intersection point is the premise of enterprise value management, outside the enterprise, such as in the financial markets, business valuation for investors, investment activities, such as mergers, mergers, acquisitions, asset sales, asset restructuring and the reconstruction of shares, listed transactions and other important reference for a reasonable price, is the basis for investors to make investment decisions.

GEM has been established to broaden the financing channels for hi-tech enterprises, as of September 2010, the first 23 batches of 120 listed stocks starting GEM total financing 85.462 billion yuan, an average of 712 million yuan per share starting fund-raising, venture Listed is a high-tech companies seeking to develop effective measures to solve this bottleneck, but GEM was established more than a year, the issue price and the price-earnings ratio is too high, the market value of a serious deviation from the intrinsic value, to the GEM and the enterprises themselves are had a negative impact, correct assessment of the value of a high-tech companies an effective way to eliminate negative effects. high-tech companies listed on GEM before the public, to assess the value of the enterprise, so as to formulate a reasonable share issue price, investors get the recognition get more money, is the effective operation of GEM based in the GEM, the company's buyers and requires an estimate of the transferor company are fair and reasonable value, so that both sides of the same company in their estimates based on different for consultations and negotiations in order to reach the final transfer of ownership or merger offer. pricing for high-tech corporate finance activities in the run to help, to investment activities laid the basis for decisions.


Second, the difficulty of assessing the value of high-tech enterprises

Premium high-tech enterprises are too many, mainly due to their own characteristics different from traditional businesses, resulting in a greater degree of difficulty of the enterprise value evaluation to assess the real value of enterprise value and larger error. High-tech concrete manifestation of the difficulties of valuation in the following areas:
1 high-tech enterprises in the proportion of intangible assets is far greater than the tangible assets, intangible assets relative to tangible assets is more difficult to assess as knowledge-intensive enterprises, mainly in high-tech enterprise technology, patents, goodwill, innovation Researchers intangible assets such as core values, the importance of intangible assets is much more than tangible assets and physical assets while, because of its non-reproducibility and uncertainty assessment of intangible assets became the focus of high-tech enterprises and the difficulty of assessing the value of .

2 for high-tech enterprises in the market is difficult to find comparable companies. The one hand, because high-tech vary widely, generally difficult to find industry, technology, scale, environment and market are quite comparable companies and other , the country's property market has not yet mature, a limited number of transactions, to conduct a comprehensive comparative lack of conditions which will give appraisers use comparable information for business valuation company to bring greater difficulty.

3 GEM requirements for high-tech companies continue to operate at least three years, many high-tech business cycle is short, limited historical financial data, while in business valuation, often the use of enterprise data to estimate past the current input variables, For example, estimate the company's risk factors and expected rate of return. high-tech enterprises, the lack of historical information is a difficult assessment.

4 GEM for the profitability of high-tech enterprises less demanding, so most high-tech companies listed are not currently profitable or very little profit. High-tech enterprises in the face of market uncertainty, combined with a lower success rate, cash flow in fluctuate within a certain period of time will be relatively large, high-tech companies may start early negative cash flow. But once the technology into productivity, high value-added products will bring great Economic benefits to the enterprise, this time positive cash flow will be greater value addition to the establishment of a small number of companies have earnings, the majority of high-tech enterprises (including most of the network business) there is no profit or very little profit which the assessment staff, means that under the current profit can not be estimated future earnings. In fact, because the profit is negative, calculated from historical data The growth rate is of no significance.

5 high-tech enterprise revenue recognition problems that still exist due to high-tech product sales and services revenue and specificity may lead to real income does not match the book, especially software companies and Internet companies, their revenue recognition issues caused in the accounting profession a lot of controversy, and thus to the assessment of business history or current income more difficult to confirm.

6 high-tech companies too much uncertainty, lack of effective measurement of risk, difficult to estimate the company's future earnings, even if the estimate of subjective factors also occupy a dominant position, which also makes the valuation of enterprises face some difficulty.


Third, the enterprise value evaluation methods applied contrast

The current internationally accepted business valuation methods, including a total of four categories: cost approach, market approach, income method and option method.

The principle is the cost charged by the replacement cost of the loss value to determine the value of the assets of the enterprise. Determination of the cost of future benefits is the owner of the replacement was assessed by determining the ability of future services assets the amount of money required, it is also called the replacement cost method. This method is based on the assumption that: the new asset price and life of the asset beyond its Economic value of services provided is considerable, directly to the replacement cost of the assessment to evaluate and adjust the object, and high accuracy with the assessment for listing the high-tech enterprises, the creation time is short, the lack of historical data, and more focus on the company's future earnings, so the current cost method in the GEM is not widely spoken.

Markets Act, also known as the relative valuation method and the comparable company law, the principle is the company being evaluated by comparing with known companies, according to the known value of the enterprise as a whole come to be assessed the overall value of its underlying assumptions are: the industry's greater comparability between companies, the relevant indicators in line with the normal distribution the market valuation method in the shares of listed companies often apply, a representative of the model are: price-earnings ratio model, the price sales ratio model, market sales ratio model, Economic value-added models, traffic models than the market value, return on marketing models.

For the high-tech enterprises, while large differences between enterprises, officers are not the same, technology can not be copied, so it is difficult to find a comparison of business, less historical data, the modified index is also more difficult to compare On the other hand high-tech enterprise founded a short time, some companies may not yet profitable, this is also difficult to market valuation method, but the current market approach in the application of the GEM is quite extensive, especially in price-earnings ratio multiple of law.

Earnings method is based on the company's future can be predicted by the expected return for each year to restore benefits and discounted deal. Assuming the value of the income method is determined by the amount of future earnings. Assess the enterprise value using the income method must solve three problems: is to determine what forms of income amounted to cash flow, and second, to determine the life cycle of business growth and the third is to determine the appropriate discount rate revenue law, the main models are: discounted free cash flow, profit discount model, equity cash discounted cash flow method, dividend discount model, discounted cash flow method of funds for high-tech enterprises, due to technical update faster and faster, high-tech enterprises have become increasingly uncertain future of the enterprise is expected to income, life cycle and the discount rate it increasingly difficult to make a scientific prediction, income approach faces the challenge of a certain degree, but now after the adjustment of the correlation coefficient, free cash flow method in the GEM application of high-tech company's pricing is still relatively common. Links to free download http://www.hi138.com Option method is based on the income method to further improve. Option is a securities contract, the contract gives the holder or the buyer has the option expiration date or any time before the due date to their pre-agreed price by the seller (exercise price) to buy or sell a certain number of contracts under the underlying assets of right to obtain such rights, options buyers need to buy options when their seller to pay a certain amount of insurance, call option price in the option pricing model, the most famous is the Black-Scholes model.

The nature of high-tech companies have options, because the opportunity to produce high-tech enterprise value as the market for some of its business activities have good expectations, willing to take risks to obtain future benefits, so the opportunity to buy the right value is the value of which short side the original owner of the high-tech enterprises, long side for the high-tech companies to potential investors. options occur, the risk from potential investors in high-tech business owners to transfer.

However, based on the listing of new shares priced high-tech business valuation, the underlying asset transactions more difficult, patented technology is expected to gain eyes of the beholder, the wise see wisdom, can not be unified option value, as the income approach of the new phase - the option method is also with many limitations.


Fourth, high-tech companies need to pay attention to price

First, companies must be listed on the stock based on the intrinsic value of the enterprise. Out of business too high intrinsic value of the stock makes it difficult for investors to agree, the financing of enterprises will bring some of the obstacles, from the intrinsic value of corporate shares is too low although easy to form market, but will damage the original shareholders.

Secondly, we must realize that the correct assessment of the importance of the intrinsic value of companies, in particular, select the appropriate method of assessing the importance of enterprise value. Internationally accepted valuation methods in the theory of four there are some limitations, but can be improved by modifying the model to the traditional model.

According to Wang Zhongbo teacher <<hi-tech enterprise valuation method>> mentioned, the current high-tech enterprises to adopt the modified model has the following seven categories: the first is in Research and development costs of adjustment, such as EVA and growth method flow ratio method, the second is the use of income indicators, such as price-sales ratio model, return on marketing models, the third category is the traditional indicators of valuation adjustments, primarily through the company's history data and comparable data on the valuation of enterprises indicators projections, to address the lack of high-tech enterprise valuation data and the fourth category is the amendment of the traditional valuation methods, such as the revised earnings model, book value model, the theory of multiple earnings multiple of law and protect the profit margin valuation models; fifth category is the use of non-financial indicators, the study found that for high-tech enterprises, non-financial information is greater than the usefulness of financial information, the sixth category is the multiple regression model, that is, through the introduction of multiple indicators of comparable value regression to determine the target company's enterprise value, the seventh category is the reverse valuation method, is the current projections of future data results of the valuation of high-tech companies is a reasonable approach. more high-tech business valuation method, for different sectors should be different stages of development of high-tech companies carefully chosen.

Finally, note that the stock price must not only be linked to the intrinsic value of the enterprise, but also concerned about the external environment impact on stock prices. Country's political and Economic policies related to changes in the industry for growth companies, securities market development status and other external factors on the stock price has some effect, so the pricing process should give due consideration to these factors do not ignore the not exaggerated These factors can limit some of the stock price and the external environment, the correlation coefficient, which helps companies around the intrinsic value of stock value fluctuations.


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