Cathay Huang Yanming: Science and Technology Board will reshape China’s capital market evaluation and pricing system

Huang Yanming: The estimation of stocks is still the result of a market-based game. We cannot hope that securities analysts use a set of scientific evaluation models to solve all valuation problems in stock pricing.

  The task of the analyst is to guide expectations, and to ensure that there is no potential gap between the issuer, investment banking business unit and investors.

  ⊙ Reporter Wang Xiaoyu ○ Editor Zhu Yin At the “51st China Capital Market Advanced Symposium and Shanghai Stock Exchange Directors Forum”, Huang Yanming, director of Guotai Junan Securities Research Institute, delivered a keynote speech on “How should securities research be replaced by science and technology enterprises”.

  Huang Yanming said that due to the complexity of the science and technology board company’s estimation, the investment report of the science and technology board company in accordance with the prescribed specifications should use more than 3 estimation methods to verify each other to convert the interval; there may be noProblems such as profit and overlapping of soft assets, and traditionally common estimation methods such as price-earnings ratio and price-to-book ratio may sometimes be difficult to apply. It is necessary to newly establish some estimation methods that are in line with the characteristics of science and technology board companies and the basic theory of stock value.

But at the same time, he also predicted that stock estimates will ultimately be the result of market games. With the requirement that securities analysts come up with a scientific and reasonable evaluation model, it is better to focus on building a market-oriented formation mechanism for issue pricing.

  Sci-Tech Board will rebuild the brokerage business process Huang Yanming said at the seminar that there are two aspects of the nature of Sci-Tech board: one is the capital market serving science and technology enterprises, and the other is the trial registration system.

The science and technology board can not be simply understood as the innovation of investment banking business, but should be the re-engineering of various business processes of securities companies, which involves investment banking, brokerage, direct investment, credit and research, compliance and risk control and other alternatives.

  The direct investment business is one of the securities brokerage businesses that the Science and Technology Board has entrusted with.

According to the latest “Implementation Measures for the Issuance and Underwriting of Stocks of the Science and Technology Innovation Board”
issued by the Shanghai Stock Exchange, the Science and Technology Innovation Board has implemented a follow-up investment system for relevant subsidiaries of sponsors.

  Huang Yanming’s analysis: Brokerage companies and investment and technology board companies are equivalent to bundling the brokerage’s own funds to the market.

In fact, not only the broker’s own funds, but also the issuer, the securities firm’s investment banking business unit and institutional investors, the interests of these four parties are also unified.

How to make the four of them achieve a balanced interest, the investment report written by the securities analyst in the research department plays a key guiding role.

In fact, in foreign investment banks, research departments play an important role in pricing shares.

  ”Of course, in the IPO, the analyst’s pricing accuracy, fairness, fairness, and compliance with the requirements of independence have become very important.

“Huang Yanming said.

  Science and technology board applies different evaluation methods Huang Yanming said that stock evaluation methods are divided into three categories, embedded value method, relative value method, asset value method.

General textbooks introduce more about the embedded value method and the relative value method, but they rarely deal with the asset value method.

However, some companies in the science and technology board are actually difficult to use the first two types of estimation methods, and must use the asset value method.

This will greatly test the industry judgment ability of the certificate analyst and the analysis ability of accounting and finance.

  Due to the high uncertainty of the profitability of science and technology board companies and the restructuring of “soft assets”, traditional estimation systems, such as indicators for investors such as price-earnings ratio (P / E) and price-to-book ratio (P / B)) Etc. are sometimes not applicable.

So, what kind of estimation method is applicable to science and technology board enterprises?

  Huang Yanming pointed out that, because science and technology board companies often do not have dividends or the equity-to-debt ratio is very unstable, the discounted dividend model (DDM) in the embedded value method and the free cash flow discounted model (FCFE) cannot be used in practice.

The discounted free cash flow model (FCFF) of the enterprise is based on the cash flow of the entire enterprise rather than the cash flow (or even profit) of shareholders, so its applicability is improved; the economic value added model (EVA) reduces uncertaintyThe proportion of excessive final value is also applicable to the science and technology board company.

  Regarding the common price-earnings ratio, price-to-book ratio, and relative indicators such as PEG (PE / G), EV / EBITDA, which are commonly used in the relative value method, everyone can use it in the relative value method, but there are two problems to be solved in use:The first is to have relevant financial data that can be compared. For example, the replacement of the price-earnings ratio method is that the company must have a profit, but some science and technology board companies may not have a profit. The second is that it is difficult to find a comparable group of companies.

The liquidation value method in the asset value method may not be applicable at the beginning of the listing of the science and technology board, and the applicable replacement method should be the replacement cost method.

  Expert Huang Yanming, because the relative value method 杭州桑拿 is relatively low, Guotai Junan Securities Research Institute has stipulated that for the valuation of science and technology board companies, it must replace FCFF, EVA and one of the valuation methods based on the replacement cost method.Only when there are more than two other estimation methods can the estimation be fully estimated.

  At the meeting, Huang Yanming rejected two relative estimation methods of technology companies that have been popular in overseas markets. One is the market-to-sales ratio (P / SPS, SPS is the replacement), and the other is the single-client equity value (equity value / U, U is the number of users).

Huang Yanming believes that both the sales revenue and the number of customers belong to the enterprise, not the shareholders.

Therefore, Guotai Junan Securities Research Institute has transformed 南京桑拿网 these two stock value methods, transforming the P / SPS into an enterprise value / revenue model (EV / S); transforming the equity value / U into an enterprise value / customer.Quantity (EV / U).

Among them, the enterprise value (EV) is the sum of equity value, debt value, and minority shareholder value. After calculating the enterprise value, the debt value and minority shareholder value are deducted, and the balance is the equity value generated by the stock valuation.

  Huang Yanming also suggested that the replacement cost method is an estimation method that looks easy but is actually difficult, which requires analysts to consider the replacement of significant assets and the replacement of hidden assets to replace the organization of the company.Value, the value of human capital, etc.

In addition, it is necessary to consider how to recapitalize expenditures that have been expensed in accordance with the principle of caution in accounting statistics.

  Guide all parties to improve market efficiency, but the above stock valuation method has rigorous scientific reasoning steps and a solid accounting and financial basis. However, according to Huang Yanming, stock valuation is both a scientific and philosophical issue, as well as an academic issue and a game issue.The estimated value model is not the more detailed, the better the quantification, the key is to be understood and accepted by people.

  ”The characteristics of the game during the IPO pricing stage are obvious.

The pricing of new shares depends on the expectations of the issuer, the expectations of the institutional investors participating in the inquiry, and the overall economic and financial market environment and the balance of the interests of the sponsoring parties to all parties.

Huang Yanming believes that the microstructure of the capital market investors and the issuance system will also have a significant impact on the pricing results of stocks.

  Huang Yanming further stated that everyone is looking for the precise intrinsic value of the enterprise. “But the model can only help us analyze, but it can’t accurately locate it.

“Estimation of stocks is ultimately the result of a market-based game. We cannot hope that securities analysts use a set of scientific estimation models to solve all valuation problems in stock pricing.  ”The task of the analyst is to guide expectations, and there is no potential gap in the expectations of the issuer, investment banking business unit and investors.

If the gap is too large, it will hurt the efficiency of the capital market in allocating social resources.

“Huang Yanming is outstanding.