Valution Difference Of "ZYMC" Between A-share And H-Share

With the opening and development of China's capital market,more and more Chinese companies have begun to issue stocks in multiple markets,and A+H dual listings in the Mainland and Hang Kong have become the financing choices of many companies.Based on the one-price law and market arbitrage behavior,the same company listed in the two places should have stock price that should not be much different.However,in the segmented market,double listed companies always have large share price differences in the A-share and H-share markets.Seeking and understanding the reasons behind this phenomenon is very important to improving market efficiency,listing choices of companies and risk perception of investors.This article takes the ZYMC served by the author as the research target.Firstly,it analyzes the selection strategy of the ZYMC listing strategy and compares the price performance and premium performance between its A-share and H-share market.Then,based on Fisher's Capital Budget Assessment Theory,Modigliani and Miller's Capital Structure Theory,and Sharp's CAPM Pricing Theory,Use the free cash flow discount model to estimate the theoretical value of the ZYMC and compare and analyze the deviation between the A-share price and the H-share price and the theoretical value.Later,the impact of the parameters estimation that include capital cost,beta coefficient,return on equity and retained earnings in the A-share and H-share prices was analyzed.It is found that different transaction costs,trading systems and risk preferences have a significant impact on the valuation parameters in the A-share market and the H-share market,which is one of the important reasons for the price difference between the two stock markets;Due to the relatively low risk appetite,the equity cost,the risk premium required by investors and the return on investment of H-shares are higher than A-shares,resulting H-share capital cost higher than A-shares.As a result,H-share valuation of ZYMC is lower than A-shares.H-share investors with relatively low risk appetite also have higher requirements for return on equity than A-share investors with higher risk appetite.Therefore,based on the same return on equity,H-share investors give ZYMC lower evaluation,resulting in the valuation of ZYMC H shares is lower than A shares;In addition,the determination of the retained yield of the ZYMC failed to match its return on equity,which reduced the investor's expectation of the company's future growth,and passed messages to the outside market that the management level was relatively low.Because H-share investors of value investments are more sensitive to this,H-share investors gave a relatively low valuation for H-shares.Finally,the article gives corresponding suggestions from A+H company stock market value management,A+H share investor decision-making and China's capital market related system construction,in order to guide the A+H company to reasonably determine the share issue price and A+H share investor rational face different risk and valuation between the two markets and promote the healthy development of the A-share market and reduce the gap with the international capital market between A-share market.