High-new-tech Corporation Valuation

High-tech industry, which is the most technology and information-intensive line in human society, is the most viable business with a fastest growth in the world. Our country is in such a historical period when high-tech industry has been developing rapidly. And this industry has become one critical contributor for our nation's economy growth. Especially, after the world financial crisis, the transformation of Chinese companies has become particularly important. Growth enterprise board has been set up to implement national self-renovation strategy and to raise the proportion of direct financing. However, many low-profit and small-size companies with too high stock price and P/E ratio exist in the high-tech industries of environmental, protection, information, electronics and Biological Pharmacy which have advantage in technology and human resource. This phenomenon raises a great challenge to the existing theory and operation of firm evaluation.This thesis mainly uses the approach of integrating analytical method and case study, and is composed of five sections.The first section is an introduction which presents the significance, content, approach, and technical route of this thesis.The second section is a theory review of high-tech firm's evaluation. Firstly, the definition, classification and character of high-tech firms are defined; Secondly, the history and the methods of evaluation is reviewed; Finally, those methods are summarized and appraised.The third section includes model building and analysis. The combination of Discounted Cash Flow Method and Real Option-Pricing Method is proposed in high-tech firm's evaluation. Prediction of discount rate and cash flow and the calculating method of real option are discussed.The fourth section is the case study. ABC firm, where the author have been practicing, is taken to be an example in this part. The theories mentioned in section three are applied to evaluate ABC firm and to examine the accuracy of the result.The first part of this section introduces the background of this case; The second part analyzes the pre-conditions; The third part predicts the cash flows; Discount ratio is predicted in next part; The fifth and sixth parts evaluates the firm value with Discounted Cash Flow Method And Real Option-Pricing Method respectively; The last part estimate the whole value of ABC firm.The fifth section is a conclusion. Innovation point, shortage, and expectation of further research are given in this section.This thesis is innovative in two respects:method and tool. In other word, the combination of Discounted Cash Flow Method and Real Option-Pricing Method is applied in high-tech firm's evaluation, and a firm evaluation system is used as a tool.