Equity Valuation Of Chinese NEEQ Market Based On PFM Model

The NEEQ market aims to provide financing channel for innovative,entrepreneurial,high-growth technology-based SMEs and promotes the construction of multi-level capital market system in China.The number and magnitude of listed companies are increasing in the face of the improvement of NEEQ various systems,especially the expansion of NEEQ since 2013,that how to evaluate the NEEQ enterprise’ s equity value reasonably and effectively is enhancing urgently.Firstly,this paper put forward to the significance of the research,then review and summarize the related literature.The development of NEEQ market and characteristics of enterprises were analyzed,for example the small enterprise scale,short operation time,high-growth,high-risk,non-continuous stock trading.And the enterprise’s equity value can be assessed by the real option theory.After analyzing the problem that parameters are very difficult to be estimated,this paper obtains the relationship between enterprise’s asset value and its volatility with their financial indicators through the data of Growth Enterprise Market listed companies in the same industry,according to the principles of PFM model which show that the change of enterprise’s asset value or its volatility in unlisted and listed companies relates strongly.And the NEEQ enterprise’s value and its volatility of Chinese NEEQ Market could be calculated by using the target enterprise’ s financial indicators.Then we can evaluate the NEEQ enterprise’s equity value by real option pricing model.Further considering the influence of the liquidity discount,the result of the assessment are adjusted.Obtained by research results,book value of all assets,the proportion of EBITDA or intangible assets are proven to be the most significant groups of factors that reflect enterprise’s asset value.And asset-liability ratio,companies’ sales have strong interpretation ability for the volatility of enterprise’s asset value.The theoretical equity value of NEEQ companies which have entered the innovation level are evaluated as examples and then compared with stock price,demonstrating the validity of proposed method to determine parameters based on PFM model and the rationality of real option pricing method.