The IPO Pricing Model Design Of Our Growth Enterprise Market

The Growth Enterprise Market (GEM) is a financing market especially servingthe small and medium-sized enterprises with growth potential, and its emergencefacilitates their financing, provides capital guarantee for their development andimproves the structure of the multilevel capital market, making the investors havemore choices and chances. However, some high-tech companies in the early stage,due to their small scale, short operation period, new businesses and more, usuallyhave short profit record, uncertain profitability and it is hard for them to find suitablycomparable counterparts. Therefore, neither the traditional absolute evaluationmethod nor the traditional relative evaluation method can exactly show the companyvalue.Stock pricing has been a hot issue for researchers home and abroad. This paperanalyzes and studies the advantages and disadvantages of the current growthenterprise board pricing theory, and constructs the stock pricing model of the growthenterprise board according to our country‘s actual situation. The model constructionfollows the following basic thinking: considering that the price-earnings ratio modelis not suitable for the particularity of our GEM‘s development and it‘s difficult tofind similar companies that have the same growth rate and can be used as referencestandards, the growth rate‘s effects on the price-earnings ratio model should be firsteliminated, and then, each percentage point‘s growth rate corresponding to oneprice-earnings rate under current conditions can be obtained according to the ratiobetween the price-earnings ratio and the growth rate. The current conditions refer tocomprehensively evaluating the factors that affect the companies‘stock prices so asto reflect the general situation of the companies and design the modifiedprice-earnings ratio model.To sum up, this paper discusses the basic theories according to which thepricing model is made, that is, the pricing theory and the demand and supply theory.Based on these theories, the model is constructed and described, and the modifiedprice-earnings ratio model is designed with the introduction of the company valueevaluation system. Then, the evaluation effects of said model is tested, analyzed andcommented on according to the current financial data of the GEM‘s stocks.