Second, we often hear such comments: "This stock is overvalued" and "A shares are already very cheap". So, what is valuation? We know that one of the most basic functions of the financial market is price discovery, that is, pricing the stocks issued by listed companies, and its core is valuation. There are many valuation methods, which can predict the annual net cash inflow of listed companies in the future and get its absolute value by discounting it to today, but relative valuation is more commonly used, that is, P/E ratio (PE) and P/B ratio (PB). P/E ratio refers to the ratio of stock price to earnings per share during an investigation period (usually 12 months); P/B ratio refers to the ratio of stock price to net assets per share. The so-called relative valuation, that is to say, valuation is not a direct reference value of the stock price, but a vertical and horizontal comparison with history and other stocks to see the level of valuation.
Three, due to the characteristics of the industry in which the enterprise is located, the development stage of the enterprise, the market environment and other uncertain factors, the valuation methods of the enterprise are not the same. In the view accepted by the mainstream academic circles, Mr. Qiu Chuang, former deputy director of the Department of International Accounting in university of international business and economics (now the chief expert of Jinghua Tianchuang (Beijing) Consulting Co., Ltd.), made the following systematic description of enterprise valuation-to help enterprises establish a long-term financial forecasting model for strategic investment and financial investment, Monte Carlo method can be used to make statistical simulation analysis of random variable indicators according to probability distribution.
Free discounted cash flow method model, economic added value or economic profit model, dividend discount model and valuation model based on market ratio are used to analyze the financial feasibility of investment.