A Case Study On Equity Valuation Of LQ Wind Power Company With Improved Discount Rate

As the shortage of non-renewable energy continues to intensify and the environmental problems caused by carbon emissions become increasingly serious,countries around the world are actively looking for new energy,and the new energy industry has become a hot industry.Wind energy is a promising new energy,it can be renewable,and pollution-free,in the use of new energy,in a relatively fast growth level,for the development of new energy industry,has been occupying a high position.Coal power generation will produce a large amount of carbon emissions,so in recent years,all countries are changing the power generation mode and actively looking for pollution-free new energy for power generation.Wind power generation by using wind energy has short construction cycle and flexible installation,so it has been attached great importance to by the state.The wind power industry is related to people’s livelihood and employment issues,and its social responsibility is heavier,so scholars should pay more attention to it to help the wind power industry develop better.Although the wind power industry is greatly affected by national policies,with the development of the wind power industry,it is bound to be marketized eventually,and marketization puts forward higher requirements on the accuracy and rationality of the wind power industry’s valuation.Therefore,it is of great significance to study the equity value evaluation of the wind power industry.The research object of this paper is LQ Wind Power Company.Through literature research method and case analysis method,it studies the equity value evaluation process of LQ wind Power company under the condition of capital increase and share expansion.Combining with asset pricing theory,it objectively analyzes the whole evaluation process and finds out its shortcomings,that is,the determination of discount rate is not reasonable enough.When the income method is used to determine the equity value of LQ company,the discount model of equity cash flow is adopted,and the discount rate can be calculated by the cost of equity capital.In this case,the identification of equity capital and the pricing model selected are not very accurate.The capital asset pricing model with single factor as regression explanation is selected,which cannot explain the effect of size and value factors on the cost of equity capital,and the discount rate obtained is one-sided and inaccurate.To solve this problem,this paper introduces the Fama-French three-factor model to improve and revise the calculation of discount rate.It has been proved that the three-factor model can better explain the impact of market size and value factors on the cost of equity capital and obtain a more accurate discount rate.The innovation of this paper lies in that the fama-French three-factor model is adopted instead of the traditional capital asset pricing model for the determination of discount rate in equity valuation.The three-factor model takes more and more comprehensive factors into consideration,making the discount rate more reasonable.In data selection,daily return rate,daily market value and daily book value in the stock market are used instead of the previous monthly data.Python software is used for regression analysis to get the discount rate of the wind power industry,which makes it more accurate.It provides a new idea and method to evaluate the equity value of wind power enterprises and makes the equity value more accurate.