| With the steadily strengthening of normalization construction and the gradual extending of organization investors, the investment idea of our country's stock market is also undergoing a continuous changes and the Value Investment Idea is attached more and more stress on. The core thinking of the Value Investment Idea is to measure the "inner value" of a share through using a scale method, to compare the value with the market price of the share, and then to deicide the investing strategy on the share.The price/earning ratio is a usual analytical method to judge the value of stock investment. First, the accounting return is applied to The price/earning ratio, on which accounting principles will produce an effect in a certain extent. For instance, the historical cost will be applied to assess depreciation and merchandise, then the costs of depreciation and merchandise calculated according to their historical costs will underestimate its real economic values because both the replacement costs of commodities and permanent assets will increase along with the average level of market prices during a high inflation period. Therefore, The price/earning ratio is always lower during high inflation period. Second, the immediate-term accounting return is applied to the price/earning ratio, but the "normal" price/earning ratio is current price divided by future earning. During a business cycle, the weaves of the ratio of share price to immediate-term return are very hard when immediate-term return deviates from future return more or less. Therefore, without considering the long-term profit-making capability of a listed company, it is impossible to estimate the value of price/earning and also impossible to judge the obvious relativity between the growth of a listed company and price/earning ratio. It follows that there is a certain limitation for applying the price/earning ratio analytical method to estimate share price. In fact, the key to estimate the value of share investment on a listed company is to analyze how is the company's competitive advantage and how long is its lasting duration.Michael Porter holds that "In the final analysis that the competitive advantage of enterprise originate from the enterprise produced value exceeding the cost for its customers. From microscopic economy theoretically, the source of enterprise's competitive advantage is the sum of consumer's surplus producer's surplus. This is the answer to illustrate why we always apply the enterprise's real marketing occupancy to determine how is the enterprise's competitive advantage.The qualitative estimation methods on enterprise's competitive advantage, such as Michael Porter's Value Chain Analytical Method, Boston's Matrix Analytical Method, Massakin's Matrix Analytical Method and Life Period Analytical Method, just describes and analyze the various factors affecting the enterprise's competitive advantage, however, their real application still exists a big limitation. Muhittin Oral has established the Model of Competition Ability, and used for appraising how is the competitive advantage of an enterprise to the other enterprises in a same trade. Wang Hua and Chen Xiaojian have applied the Competitive Index to discuss the competitive position problem of enterprises in a trade. The Quantitative Assessment Technique on enterprise competitive advantage can also use to strategy making and enforcing besides using to estimate how is the relative competitive advantage of enterprise. Competitive Advantage Period refers to the duration that the net present value of enterprise-maintained future asset return is positive, namely, the sustainable duration of the investment earning rate exceeding the investor required rate (namely the capital cost). According to the share price estimating formula of Miller and Modigliani (1961), the theoretical calculation formula on Competitive Advantage Period can be inferred, but its actual application still exists restriction.According to the Bonus Discount Model put forward... |
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