Based On Real Options Valuation Of Solar Photovoltaic Industry Enterprises

With the development of science and technology, traditional non-renewable energy resources such as coal, oil and natural gas can neither satisfy people’s increasing needs nor meet the needs of economic development. Extensive use of traditional energy leading to increasingly serious environmental pollution, so people began to seek for new energy development and utilization. Since new energy will be the world’s primary energy of the future, new energy industry development have a direct impact on a country’s position in the world economy in the future.Photovoltaic power generation is one of the few areas in China which can stay ahead of the high-tech field in the world. This article select solar photovoltaic industry as a representative of new energy, through its development background research found that China’s photovoltaic industry in such a two out situation as raw material and equipment rely on imports while products rely on exports. Therefore China’s photovoltaic industry shows characteristics as larger fluctuations in the international market, over-reliance policy of subsidies and external markets, rapid innovation of technology and equipment, uneven development of industrial chain, photovoltaic product’s prices cannot be predicted, etc.. These characteristics make investors in this new energy photovoltaic industry faces great uncertainty and investment risks should not be ignored. Traditional enterprise valuation method has some inapplicability to photovoltaic industry due to the industry’s characteristics. Through the research and application of real options theory, this article remedy a defect in discounted cash flow method when dealing with the uncertainty of the enterprise value, and provide a new way to evaluate the new energy photovoltaic industry enterprise value.This paper chose Schwartz-Moon Real Option Pricing Model, and made necessary improvements and simplification in terms of the model parameter estimation, then use MATLAB software and Monte Carlo simulation to simulate the company’s future cash flow, and represented the company’s future is facing uncertainty by its dynamic random process. This paper chose Shenzhen extension New Energy Technology Co., Ltd. as a case to study verify the applicability of the model, compared the calculated theoretical value per share with corporate shares value in reality, analyzed the enterprise value results which is calculated by cash flow method after removing the uncertainty resulting, and did parameter sensitivity analysis of part of the assessment model variables, then obtained several variable parameters which had greater impact on the enterprise value. Finally, this paper summarizes the research and given some suggestions on businesses, governments and investors, then discuss the shortage and the direction of further research at the end.