Analysis On The Value Of Loss-making Enterprises On The Scitech Innovation Board

On June 13,2019,the Sci-Tech Innovation Board(also called the SSE STAR MARKET)opened,shouldering the historic mission of supporting the innovation enterprises development and promoting the capital market reformation.This board allows loss-making enterprises to list on it.For Loss-making enterprises,the valuation is more important and complicated,and commonly used methods such as PE or cashflow-discount are no longer applicable.This paper aims to analyze the value driving factors of loss-making enterprises on the Sci-Tech Innovation Board and explore appropriate valuation methods.Cambricon Limited.is the subject of this study.Cambrian,a representative company in the new-generation information technology industry,has not made a profit by the end of 2021 since it went public on July 20,2020.Its market value and research and ability are among the best,which means it has a certain representativeness.The characteristics of the Sci-Tech Innovation Board and why these enterprises made loss are discussed.Then the value drivers of Cambricon Limited.were analyzed,including external and internal factors,finding non-financial factors are main drivers.Based on the above characteristics,the PS ratio method is the appropriate method to evaluate loss-making enterprises.A loss-making enterprise PS ratio choice model of comparable companies is built,i.e.,through the financial indexes and research and development indexes,eliminating companies having obvious gap with the target company;considering the difference between time and board of issuing or listing;selecting companies similar in market segment growth rate,market space,entry barriers and market competition pattern.