Zhongtian Technology Enterprise Value Assessment Based On FCFF Model

High tech industry is characterized by high uncertainty,high risk,strong growth and long research and development(R&D)cycle.Different characteristics of different R&D periods bring difficulties to the investment and financing decision.The communication industry is the hot plate in the high-tech industry.The rise of 5G Market makes the communication industry become the focus of the capital market once again.Communication cable industry is facing inter-generational change,will usher in the next peak of development,the valuation of communication cable enterprises need to be resolved.Based on the characteristics of high-tech Enterprise valuation,this paper compares and analyzes various valuation models under relative valuation method and absolute valuation method from advantages and applicability.The paper adopts the FCFF(Free Cash Flow for the firm)model as the main method,and the P/E ratio model as the auxiliary method,the paper analyzes the valuation of the communication cable enterprises that have passed the initial stage and are about to enter the next peak period.In the case introduction part,this paper chooses Zhongtian Technology Co.,LTD.(ZTT),a representative listed company of communication cable,as the research object.Based on the comprehensive study of the current situation,development and risks of the communication cable industry,the paper evaluates the core competence,viability and risk factors of the enterprise.In the valuation analysis part,firstly,based on historical financial data,the financial index method is used to objectively evaluate the financial status of enterprises.Secondly,the applicability of FCFF two-stage model is discussed from two aspects of industry environment and enterprise itself.Thirdly,the free cash flow of enterprises is predicted in the high-speed growth period from 2021 to 2025.Based on the market data of communication cable industry,the weighted capital cost of ZTT is determined,and the valuation result is obtained by introducing various parameters into the model.Finally,the reliability of the valuation results is verified by using the P/E ratio method.The valuation result of the FCFF model is slightly higher than the base day market price in a reasonable range.The reasons of the difference are analyzed from four aspects: capital market,industry characteristic,enterprise itself and valuation model.This evaluation found the shortcomings of the FCFF model,and put forward suggestions for parameters that can be optimized,hoping to provide a reference for similar communication cable enterprise value evaluation,promoting the application of absolute valuation method in the valuation practice of communication cable enterprises.