Q: Investment value appraisal process and methodology

A professional body is required to conduct an assessment.

Summary. PE (price-earnings ratio), as one of the most important value valuation indicators in the capital market, refers to the ratio of **** divided by earnings per share. PE = per share** Earnings per share = market capitalization Net profit = PB ROE, which is easy to calculate and has become a valuation indicator automatically provided on various investment software.

PE is widely used, not only to evaluate the valuation of a single enterprise, but also to evaluate the average valuation of the entire industry or even the entire market. However, there are some important issues that need to be paid attention to when using PE valuation, otherwise you may fall into a valuation trap.

Views on investment valuation.

PE (price-earnings ratio), as one of the most important value valuation indicators in the capital market, refers to the ratio of **** divided by earnings per share. PE = per share** Earnings per share = market capitalization Net profit = PB ROE, which is easy to calculate and has become a valuation indicator automatically provided on various investment software. PE is widely used, not only to evaluate the valuation of a single enterprise, but also to evaluate the average valuation of the entire industry or even the entire market.

However, there are some important issues that need to be paid attention to when using PE valuation, otherwise you may fall into a valuation trap.

PE is the effect, not the cause. Generally speaking, the higher the PE, the more expensive the stock price, and the higher the investment cost; The lower the PE, the cheaper the share price and the lower the investment cost. However, it should be noted that PE is the result of business operations and stock price fluctuations, which happened in the past, and does not represent the degree of return on investment in the future.

Making investment decisions mechanically through PE valuation may lead to a causal reversal. Therefore, PE can be used as an important reference, and it is also necessary to predict the future development prospects of the company and the industry in which it operates.

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Generally, enterprises use the following three methods to evaluate the investment value of the project and write the investment value analysis report.

1. DCF method.

In the field of corporate finance, the DCF project investment value evaluation method has long been the leading method for evaluating strategic investments. Despite increasing criticism of this approach, more than 80% of large companies still use the DCF method as their preferred tool for investment decision-making, probably because it is relatively simple to use and intuitively appealing.

Second, the DTA method.

The DTA project investment value assessment method is a method that simulates investment decisions by referencing a series of continuous decisions and random events, and it is characterized by taking into account camera decisions and uncertainties. In short, the DTA approach is to gain flexibility by segmenting decisions. The risk of an investment decision is depicted in terms of the different probabilities of random events.

3. ROA method.

1. The concept and types of real options.

Real options are developed on the basis of financial options, and the two are strikingly similar. A financial option is a right that allows the holder to buy or ** a certain financial asset on or before the expiration date, while a real option is an option on a physical investment, that is, the right that an investor can take or refrain from taking a certain action at a certain point in the future.

2. The framework of real options analysis.

The real options analysis framework consists of four steps: the first step, regardless of the flexibility of the investment decision, calculates the underlying present value of the project as the basis for the pricing of the real option. The second step is to build an event tree to simulate the uncertainty.

It mainly considers the uncertain factors that affect the fluctuation of project income, and expresses the change of project value with clear values, risk-neutral probabilities and other parameters. The third step is to identify the various flexibilities that can be obtained, and to build nodes (decision nodes) of the event tree, and to convert the event tree into a decision tree. It's important to note that each node may have multiple flexibilities, but there should be clear priorities for these.

In the fourth step, a binary tree option pricing model (usually risk-neutral probabilistic pricing) is used to evaluate the value of the project that includes the flexibility of investment decisions.

Traditional valuation methods, such as the DCF method and the DTA method, are used for highly uncertain investment projects (such as R&D projects or venture capital projects) because the former cannot obtain flexible value, and the latter cannot determine the appropriate discount rate. Therefore, Shangpu Consulting advocates the use of the ROA method, which has the advantages of dealing with uncertainty and evaluation flexibility, and does not have to consider the discount rate, because the volatility parameter used in the ROA method integrates all risk factors and only needs to be calculated using the risk-free rate. Therefore, the ROA method will greatly improve the accuracy of project investment value assessment.

Investment Project investment analysis.

1. From macro, meso to micro economy.

Value investing focuses on the future growth of listed companies, so it is necessary to be as accurate as possible about GDP, future market conditions of the industry, and the company's sales revenue, earnings, costs and expenses. There are two main methods: probability and econometric model.

2. Screening industries with development potential.

Through macroeconomic analysis and industry economic analysis, investors can judge the current stage of the economy and the development trend in the next few years, so that they can further judge the industries that can have greater development prospects in the next few years.

3. Estimate the intrinsic value of **.

After identifying the industry you want to invest in, you need to conduct an intrinsic value analysis of the industry you have chosen. **There are many ways to estimate intrinsic value, but generally speaking, the dividend discount model is the simplest and most commonly used.

4. Screen the ** with investment value.

The concept of value investment is based on the theory of efficient market, which believes that the mechanism of efficient market will make the company's future stock price and intrinsic value tend to be consistent, so when the intrinsic value of the company exceeds its market, there will be undervaluation, and the market will inevitably revise its intrinsic value in the future. Due to the asymmetry of information in the market, the deviation between the intrinsic value and the market is a common phenomenon. Therefore, by rushing through the above analysis, investors can find those whose intrinsic value is greater than the market, which is what the value investment strategy is looking for.

In the international investment and financing community, venture capital plays an increasingly important role in the transformation of scientific and technological achievements. However, due to the high degree of uncertainty, dynamics and complexity of venture capital, there is a large investment risk, so it is very necessary to do a good job in the evaluation of project investment value.

The investment value analysis report is an important basis for investors in the field of international investment and financing to determine the project investment or project background, macro environment, micro environment, industry, geographical location, resources and capabilities, SWOT, market details, sales strategy analysis detailed financial evaluation of the project value estimate, reflect the various economic indicators of the project, and draw scientific and objective conclusions. The investment value analysis report and the project proposal, the feasibility study report and the business plan are different, it is mainly set in the future market value analysis to reflect the investment of the project, not only for the financial investors to fully understand the investment value and risk of the investment project, but more importantly, through the full evaluation of the project advantages, resource advantages, accelerate the intangible resources of the enterprise or project legal person has talents, technology, marketing, Project management is an organic combination of tangible capital, important financial investment decision-making power of enterprises and investment institutions. Referenced.

The format and content summary of the project investment value analysis report.

Including: project name, organizer, project investment plan, investment analysis, project construction objectives and significance, project organization.

Project background analysis and planning.

Including: Project Background 2, Project Construction Plan. 3. Main products and production technology solutions.

Analysis of the external environment.

Includes: 1. General External Environment Analysis (PEST). 2. Analysis of industry insiders.

Market demand** includes: foreign market demand**. 2. Analysis of domestic market demand.

Internal analysis. Includes: 1. Project location analysis. 2. Resources and technology. 3. SWOT analysis of the project 4. Selection of the competitive strategy of the project.

It mainly includes: financial evaluation 1, selection of evaluation methods and basis, project investment estimation 3, product cost and cost estimation, product sales revenue and tax estimation. 5. Profit and distribution.

6. Financial profitability analysis. 7. Break-even analysis and financial evaluation conclusions.

Value analysis to determine.

Including: Value Judgment Selection Valuation.

Concept of Project Investment Value Analysis Report BR >

In the field of international investment, to reduce the risk of investment mistakes and each investment activity, it is necessary to establish a set of scientific theories and methods that are adapted to the characteristics of one's own investment activities. The investment value analysis report is based on the theories and methods of international investment projects, with a wealth of information and data, qualitative and quantitative, comprehensive analysis and evaluation of the value of investment projects in the analysis and evaluation.

The project investment value analysis report is a key step before investment, the size of the project, regional analysis, project management, market analysis, economic analysis, profitability ** major issues, financial evaluation should be reflected in the investment value analysis report.

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Step by step is to follow the title of the report step by step.

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