Research On BYD's Enterprise Value Evaluation Based On Free Cash Flow Method

Valuing corporate value has always been a hot topic for businesses.Understanding the corporate value of a company is especially important for company owners.According to BYD’s2019 Annual Report,the automotive business accounts for only about 49% of operating revenue,with the remaining 51% coming from other businesses.This is also where BYD is ahead of other car brands in my country.BYD is growing steadily,whether it’s a battery or a car.In particular,we are currently actively expanding our cloud truck business and pioneering new growth poles for the company’s continued growth.Therefore,many investors believe that BYD,as the future king of new energy vehicles,has a low market value and has made many media and scholars think.In this regard,this article selects BYD as a research target based on the company’s business and its development,adopts a free cash flow valuation method,and details BYD’s corporate value and stock value at the end of 2019.Investigate and evaluate.And compare with market value.Comparison.In this paper,based on the situation that BYD is facing,this company is the subject of this research,and the FCFF model is selected from the following by combining the development status of the industry to which BYD belongs and the management status of BYD itself for many years.Many corporate value evaluation methods.Take a closer look at the company’s overall value and the stock price at the end of 2019 and compare the actual market value of the day to determine the outcome of this valuation.Since BYD’s operating income comes from a variety of businesses,this article provides a detailed analysis of the company’s operations over the last five years and forecasts operating income growth through BYD’s future development strategy.Then,based on choosing the FCFF model as the model for BYD’s corporate valuation,select the parameter indicators required for the model and predict the percentage of these indicators in future operating income.Determine the ratio of the selected parameters and combine it with the formula in the FCFF model to get BYD’s free cash flow for the next 6 years.Before calculating the overall value of BYD,you need to determine the discount rate for the FCFF model.This article uses the company’s weighted cost of capital as a discount rate and concludes that BYD’s value is undervalued by the market.At the same time,this article combines BYD’s closing prices in early 2020 to ensure that the forecasts in this article are valid through comparisons.Therefore,this article recommends that investors increase their holdings.Finally,this article combines sensitivity analysis and ranking methods to identify factors that influence BYD’s corporate value and suggest some measures to help manage BYD.