Author(s)

Yuanchen Xu

Corresponding Author

Yuanchen Xu

Abstract

As China's automobile manufacturing industry is in a critical period of transformation and upgrading, the company valuation in the new energy vehicle sector have attracted more and more attention from investors. The previous theories for the valuation of listed manufacturing companies mainly include dividend discount, cash flow discount and market relative valuation models, and each model have its own advantages. In this paper, the valuation level of BYD is calculated based on the market approach, return method and dividend discounting models, respectively. It can be seen that the calculation results of both the market method rate and the DDM model are much lower than the current market value of BYD. In comparison, the results of the free cash flow model based on the return method are closer to the market value of BYD. This may be because the level of BYD's dividend distribution is relatively low, and the business models of listed companies in the same industry are quite different from BYD's, which also causes the lack of comparability. Overall, the return method may be more applicable to the valuation of new energy vehicle listed companies, and the model parameter settings and estimation methods can also be further improved in future research.

Keywords

equity valuation, FCFF model, price-earnings ratio model, dividend discount model