Research On Biosecurity Enterprise Valuation Based On PRR Modified Beta Coefficient

The implementation of the biosecurity Law of the People’s Republic of China has driven the wave of new biosecurity infrastructure,and the biosecurity industry is about to embrace the opportunity of rapid development with the support of the policy.In addition,many voices believe that when the epidemic is completely over,the entire biomedical industry will surely accelerate its development,especially focusing on enterprises with both technology and consumption attributes in the biological field.Different from traditional enterprises,these enterprises take scientific and technological innovation as the key driving force of performance growth,so they pay special attention to the investment of R&D expenditure.Based on this starting point,this paper introduces the index of PRR,which is used for the relative valuation of high growth enterprises.The author firstly studied relevant literature at home and abroad and found that the PRR received little attention when it was first proposed.In recent years,with the listing of the science and innovation Board,the PRR has gradually been applied in the valuation of enterprises on the science and innovation board.At present,the biological industry is the most mature in the United States.In practice,cash flow discount method,namely DCF model,is considered to be the most fair valuation method for the biological industry.The traditional method to estimate the target company’s beta is to select suitable comparable companies first,and then adjust the beta of comparable companies to the target company’s beta.The selection of comparable companies should consider enterprise scale,growth and other factors.Previously,price-earnings ratio and price-to-book ratio were mostly used to measure the growth potential of enterprises in the selection of comparable companies,but the market proved that these indicators would produce high investment risks when used in enterprises with high growth.Therefore,this paper proposes to revise the beta coefficient,combine the PRR with the beta coefficient,and select the index of PRR to select the suitable comparable companies in the industry.Both the theory and empirical evidence of PRR prove that R&D expenditure has a positive impact on firm value.Compared with traditional enterprises,biosecurity enterprises have significantly more R&D expenditure and pay more attention to the value contribution of R&D investment to enterprises,which is an important factor affecting the PRR.The selection of comparable companies based on the PRR not only considers the development potential of enterprises in the future,but also suits the development characteristics of biosecurity enterprises.In the case study part,this paper takes HAIER BIOMEDICAL as an example to carry out research on the valuation of biosecurity enterprises based on PRR modification.In 2020,HAIER BIOMEDICAL has set a comprehensive set of biosecurity,launched biological samples,vaccines,drugs and reagents,blood and other business lines are related to biosecurity.Case analysis includes the development status of biosecurity industry,the history of HAIER BIOMEDICAL,business model,financial status analysis and research and development capability analysis.This paper chooses a two-stage valuation model to predict the operating income of HAIER BIOMEDICAL’s different businesses,and uses the operating income percentage method to measure its two-stage free cash flow.On the beta coefficient of correction,the choice of HAIER BIOMEDICAL in health care facilities and the service sector,according to the comparison of PRR chose three similar comparable companies in the industry scale,using Stata statistical software regression got three comparable companies beta,and according to the financial leverage is fixed averaged to get the target company is HAIER BIOMEDICAL beta.This paper discusses the biosecurity enterprises emerging enterprise valuation,such as how to better estimate valuation parameter,estimating the beta coefficient of correction is more in line with the characteristics of high bbiosecurity enterprise R&D,enrich the theory of target enterprise appraisal system,and help to improve the rationality of the target enterprise valuation,for the similar enterprise’s value assessment reference opinions are given.As for the future outlook,PRR used in this paper is greatly affected by R&D expenditure.We also need to pay attention to whether enterprises have inflated R&D expenditure,which is also the direction of PRR worth further attention and exploration in the future.