Analysis Of Stock Valuation In Electric Power Industry

This paper constructs a multi-factor valuation model for trade segmentation, which is suitable for China stock market. This model is achieved by analyzing particular characteristics of China stock market and investigating the mature stock pricing theory abroad with depth. Based on the model and corresponding research, the paper draws the following conclusions:The key factors of fundamental aspects and capital stock scale can be used as basic criteria to explain stock price estimation.Using the present model, value-orientation investment strategies can be established by distinguishing overestimated or underestimated stocks. Firstly, this paper summarizes the stock pricing theories and approaches in western securities markets. Based on the investigation , this paper analysis the suitability and feasibility of these stock pricing theories and approaches on China stock market. Integrated with China stock market particular characteristics, a new study methodology is presented in this paper. The method figures out that the multi-factor valuation model can be used as a principal model for China stock market pricing at present.Secondly, after summarizing and classifying multi-factor valuation models, leveraging other stock pricing models, this paper presents seven indexes for the multi-factor valuation model which are profit ability, profit quality, growth-ability, debt paying ability, capital expanding, assets operation and stock scale. Accordingly, the valuation model is established based on the seven indexes.Finally, the paper applies the multi-factor valuation model for the first trading day in May of the year 2005, 2006 and 2007 respectively. Through the practical cases study, the multi-factor valuation model shows great statistical results and meaningful investment indications. And the conclusions are:The structure of the factors derived from fundamental information has a perfect stability.Capital stock scale, profit ability and profit quality are selected as basic variables in the model for each year. And the model independent variables are very stable.The model and corresponding parameters passed the verification of significance level atα=5% for each year. And the explanation ability of the model from independent variables to dependent variables is higher than 75%.The trends of low-values group stocks are better than that of high-value group significantly in the two verification years.Conclusively, the multi-factor valuation model can be utilized as a core model for trade segmentation stock pricing. And integrated other information with the model practically, the model gives out more rational and comprehensive guidelines and references to select value-orientation stocks for investors.