Research On KD Capital's Decision On Equity Investment Of AK Company

Because of the rapid development of AK's business,AK plans to invite KD capital to subscribe as a strategic investor on the basis of the net profit of 30 million yuan predicted in 2018,and raise 40 million yuan of additional capital and equity according to the valuation of price-earnings ratio not exceeding 10 times.As an invitee,KD capital decision-makers have serious differences on whether to participate in the investment of AK company's equity.Firstly,whether KD capital is worth investing in AK company's equity;secondly,whether the return of investing in AK company's equity and related exit safeguard measures can achieve the investment goal of "interest,capital and profit preservation" of KD capital? This study will provide the basis of investment decision for whether KD capital is worth investing in AK company's equity.This paper will focus on the AK company's capital increase and equity expansion project from the specific plan of the target company,main industry competition,financial evaluation,company valuation,investment income calculation and wind control management.Firstly,through the analysis of AK company's basic situation,corporate governance structure and human resource allocation,it is judged that AK company has the basis for further accelerated development;secondly,through industry analysis,it is judged that AK company has the potential of sustainable development to continue to cultivate overseas smartphone market;secondly,it uses SWOT strategic analysis tool to analyze AK company's vehicle networking industry and judge A company's strategic development.K company's strategic choice of actively entering the vehicle networking is correct;thirdly,from the financial perspective of due diligence investigation and analysis of AK company,it is concluded that AK company,in the case of low gross interest rate caused by related party transactions,through high debt and high operating turnover rate,makes ROE of net assets return far superior to that of the target listed company,and thus judges AK company's profitability and capital utilization.At last,from the perspective of KD capital investment AK company's equity valuation,we use income method,PE valuation method and PE valuation method combined with PE valuation of counterpart enterprises to judge that it is reasonable for KD capital to invest AK company's equity price at 10 times P/E ratio.At the same time,we analyze KD capital investment wind control measures and earnings forecast.It is concluded that the investment of KD capital is safe.The annual return on investment is greater than the cost of capital,and the NPV is far greater than zero.It can fully meet the investment requirements of "interest,capital and profit preservation" of KD capital.Through this study,it is concluded that AK company has perfect corporate governance and correct strategic choice;AK company has strong profitability;AK company's equity valuation value is 309 million yuan by income method,and it is worthwhile to invest in AK company by PE valuation of the same industry enterprise;KD capital investment in AK company's equity has better investment earnings expectation and investment withdrawal.Safety and security.This study is helpful for KD capital to correctly analyze the opportunities that should be grasped actively and the risk points that should be rationally dealt with in the process of investing in such PE equity projects.On this basis,investment decisions should be made prudently in order to maximize the value of KD capital.