The Value Evaluation Of High-tech Enterprises Based On FCFF Model

Under the policy encouragement of mass entrepreneurship and national innovation,China's innovation and entrepreneurship vitality has been continuously strengthened,and the economic organization form and transaction mode have become diversified,which makes the purpose and method of asset evaluation tend to be diversified,especially the export-oriented economy is developed to a new level,the risk investment is developed rapidly,and a large number of high-tech enterprises rush to the market in a hurry,which convey strong impetus to the economic development in this century.Among them,some high and new listed enterprises are called "unicorn enterprises" and "gazelle enterprises" by people.The stock prices of these enterprises are skyrocketing,and many investors blindly follow up.Because investors lack rational choices,they have brought a certain bubble to the stock market.Internal and external investors both hope to estimate the value of high-tech enterprises effectively,so as to make reference for their own investment decisions.From the perspective of business content and enterprise structure,the business content of high-tech enterprises is more neoteric than that of traditional enterprises,and the enterprise structure is more flexible,especially many high-tech enterprises have a large part of assets belonging to intangible assets,which puts forward more stringent requirements for valuers to conduct value evaluation.In addition,asset evaluation is not only to provide a basis for market transactions,but also to provide decision-making references for the stakeholders of internal and external enterprises.Therefore,the significance of the current research on the enterprise value evaluation of high-techlisted companies is self-evident.In the above economic environment and market demand,this paper tried to find a reasonable and effective method to evaluate the enterprise value based on the high-tech enterprises.Compared with the traditional manufacturing enterprises,high-tech enterprises exhibit the characteristics of large initial investment,high creativity,high risk and high income.Considering these characteristics and the influencing factors of enterprise value comprehensively,this paper analyzed and compared the applicability of relevant methods,and considered the life stage of the evaluated enterprise.This paper mainly aimed at the high-tech enterprises having passed the initial stage of growth and lying on a stable development period at present,thus FCFF(Free Cash Flow for the Firm)model was chosen to evaluate the values of high-tech enterprises.Applying the FCFF model to the value evaluation of high-tech enterprises not only considered the characteristics of high-tech enterprises,but also involved the time value of money,and could find the way to improve the values of enterprises on a basis of the results of value evaluation as well.In the case study part,we chose one high-tech listed company,Hengtong photoelectricity,and chose to use FCFF model to evaluate the value of Hengtong photoelectricity by analysing its industry and own situation.In this paper,the research status and related concepts were firstly expatiated,and FCFF model was proposed for the evaluation of high-tech enterprises by combining the characteristics of high-tech enterprises with the factors that affect their enterprise values.Subsequently,Hengtong photoelectricity was taken as an example to predict the parameters involved in the FCFF model and determine the weighted capital cost and the free cash flow of the enterprise respectively,and then put these parameters into the valuation model to obtain the evaluation results of Hengtong photoelectricity.The above is the whole process of the enterprise value evaluation of Hengtong photoelectricity with the income method.Compared with the market price on the benchmark date,the valuation results of FCFF model were slightly higher,but the overall difference is not significant,which indicated that the FCFF model was feasible in the evaluation of high-tech enterprises in the stable period,and the obtained results were referential.Based on the relevant knowledge of enterprise value evaluation,this paper analyzed the cases of the specific companies,and believed that utilizing FCFF model could reflect their values the best by combining the characteristics of high-tech enterprises.It was found that using the income method was suitable for the evaluation by the means of theoretical demonstration and case analysis.Compared to the stock closing price of Hengtong photoelectricity on the benchmark day,the reasons for their differences were found,and some constructive suggestions for the future development of Hengtong photoelectricity were put forward,providing a gist of judging the enterprise value for the stakeholders such as enterprise managers,investors,government departments and societal public,which was convenient for them to make reasonable investment choices.At the same time,it was also found the shortcomings and the perfection of model parameters on a basis of this evaluation,which provided the reference for the value evaluation of similar high-tech enterprises in future,in order to promote the applications of the income method in the value evaluation practice of high-tech enterprises.