The Analysis Of Corporate Equity Valuation

In recent years, with the rapid development of the capital market in China and the economic globalization, more and more capital movements like inter-enterprise investments, and mergers and acquisitions take place. The non-listed companies in the growth and expansion stages are in desperate need of capital. A large number of companies in the growth stage can't support their developments and expansions for sake of the limited funding. Chinese capital market is still in its early stage of development, and in China, capital reallocations like the stock issuing and trading, mergers and acquisitions and so forth are not as sophisticated as in the developed markets, lacking in both theoretical study and practical guidance. The study on corporate equity valuation also lags behind and is in need of contribution.This article is structured in 5 sections as follows:The first chapter introduces the background of corporate equity valuation, briefly summarizes the study purpose and significance of this paper and reviews the existing literature home and abroad. The second chapter elaborates on the theoretical basis of corporate equity valuation by conducting an all-round comparison and analysis on the existing equity valuation methods. The third chapter gives a brief introduction on HS, targeted company for the case study, and explains why choosing this company as targeted company and which methods to use. The fourth chapter is the major part of this case study. It looks at the targeted company in deep, and uses the asset based approach and income approach to value the company's equity. And by going further to compare which approach is more appropriate for this targeted company, this paper takes the equity value measured under income approach to be the exact equity value of the company. The fifth chapter concludes this paper by summarizing the enlightenment brought by the case analysis, recalling on some of the problems encountered in the HS company equity valuation process, and putting forward solutions to the problems.This paper studies the equity valuation of non-listed company in the case of HS. In this paper, two valuation methods, the income approach and the asset based approach are both implemented for the equity valuation of HS and the income approach turns out to be the better one. Problems pop out in the valuation process, and though this paper uses some techniques to circumvent the possible biases, defects of the existing valuation methods like subjectivity and so on are more than common when valuing both listed and non-listed companies' equities. And techniques are not all-time effective. Therefore, there is still need for further study on better solutions.In general, this paper analyzes the current circumstances of the non-listed companies' equity valuation both in theoretical research and in practice. Through case analysis, this paper is fully aware of the problems that exist in the equity valuation process and puts forward constructive solutions. The accurate valuation on the equity of non-listed companies is essential for the evaluating company's making right decision on capital allocation and also for the future development of evaluated company.