Valuation Of China's Steel Enterprises Under Periodicity Background

Iron and steel industry is one of the important pillars of China's national economy,in recent years due to the gradual increase in international trade protectionism tendencies,and the huge debt which generated by the laggards of state-owned enterprises reform,as well as the uncertainty surrounding the cyclical industry,all of these make China's iron and steel enterprises gradually into a difficult situation.In this context,the traditional asset evaluation ideas will no longer be fully applicable to China's iron and steel enterprise value assessment.It is difficult to make an accurate assessment according to the characteristics of China's steel enterprises,so there is the need for in-depth discussion.This paper argues that the operating conditions and profitability of China's iron and steel industry are fluctuating under the cyclical background,which make the sustainability of the operation can not be guaranteed.Therefore,this paper divides the value of China's iron and steel enterprise into two parts,namely,the enterprise value under the continuous operation state and the enterprise value after the financial trouble.The former can be measured by the traditional income method,while the latter first need to consider the probability of falling into the financial difficulties,and then the enterprise value can be simulated by the option to calculate it.In the process of testing the result of the model,this paper chooses the Xining Special Steel,which is in financial trouble,and uses the evaluation model to estimate the value of the enterprise and compares it with the stock price of the benchmark date,with a view to test the gap between model results and the public market investors expectation.There are two main innovations in this paper.First,the cyclical enterprises can not simply use the traditional evaluation ideas,but should combine the characteristics of the enterprise to modify the assessment model to cyclical enterprises.Second,different types of industrial policies combined with different macroeconomic cycles,will produce four different industry trend.When we want to make revenue forecast for a cyclical business,we must first establish a grasp of the trend of the future industry boom.