Comparative Analysis Of Enterprise Valuation Based On FCFF Method And PEG Method

In June 2019,SSE STAR Market was officially opened on the Shanghai Stock Exchange.Focusing on the development of high-tech sectors such as new-generation information technology and high-end equipment,the SSE STAR Market provides various services for high-tech innovative enterprises,such as issuance,financing and trading.The semiconductor industry plays a pivotal role in the development of today’s economy and society.In computing,networking,electronic communications,the Internet of Things and other fields,semiconductor is the components of the electronic devices in those fields.The development of the semiconductor industry is related to the information security and overall strength of a country.It is also an important industry strongly supported by the Chinese national policies.Therefore,it is of great significance to evaluate the semiconductor enterprises on the SSE STAR Market reasonably.Investors need to have more knowledge of the value of the listed companies of SSE STAR,Whether they are listed for initial public offering or traded in the market.Hence it is very important to reasonable assess the value of those companies.However,due to the characteristics of high growth and high risk of SSE STAR Market semiconductor enterprises,some current valuation methods are not applicable to SSE STAR Market enterprises,which leads to individuals or enterprises cannot make reasonable decisions in areas such as investment or mergers and acquisitions.Consequently,this thesis is centered on the core issue of how to better evaluate the value of semiconductor companies in the SSE STAR Market.This thesis starts from the semiconductor enterprise valuation of SSE STAR Market.Firstly,based on the enterprise valuation,FCFF method and PEG method,it studies and sorts out relevant research trends at home and abroad,compares and analyzes the absolute valuation and relative valuation methods.Secondly,this thesis analyzes the characteristics of high science and technology content,large capital investment and great development potential of the semiconductor enterprises of SSE STAR Market,and discusses the applicability of FCFF method and PEG method in combination with the basic situation,revenue ability,profitability and research and development ability of the Chipown company,which lays the foundation for the following two models to explore the intrinsic value of the company.Then,it enters the main part,firstly by determining the forecast period,free cash flow and discount rate,FCFF method is used to obtain the internal value evaluation results of Chipown Company,then the internal value evaluation results are obtained by determining the expected growth rate of the enterprise,the price/earnings ratio level and the benchmark PEG coefficient.The two models of the value evaluation of Chipown Company are compared and analyzed.Finally,it is concluded that PEG method uses compound growth rate to reflect the future growth of enterprises,which reduces the one-sided influence of a single index on the valuation of high-growth enterprises to a certain extent.Therefore,this thesis believes that PEG valuation method is more suitable for the valuation research of scientific innovation board semiconductor enterprises.Therefore,for enterprises in industries with different characteristics,appropriate valuation methods should be selected to carry out internal value evaluation on the basis of analyzing the characteristics of enterprises in the industry.This has far-reaching influence on the determination of subsequent strategies of enterprises,providing investment references for investors,and improving the efficiency of Chinese capital market.This thesis further enriches and improves the SSE STAR Market company value evaluation theory,and provides a new perspective for our SSE STAR Market company value evaluation.