Market price method
A method to judge the value of the target company by looking at the value of similar companies in the market. Basically, all methods that use multiples fall into this category.
Obtained method
Judge the value of the company according to its future income. The income mentioned here is not limited to income, but also includes profits, cash flow generated and so on. This method is one of the most widely used valuation methods.
Cost method
Building an enterprise from scratch and making it grow to the same cost as the target enterprise is the value of this enterprise. This method is generally mainly used to find the lower limit of valuation.
Valuation and adjustment of fund companies
Fund companies adjust their valuations, that is, when they estimate the net value of funds, they make technical adjustments to the prices of investment products with no market price (such as suspension) on the valuation date.
According to the relevant provisions of the Guiding Opinions on Further Regulating the Business of Securities Investment Funds issued by the China Securities Regulatory Commission in 2008, if there is no market price on the valuation date, and the economic environment has changed significantly after the recent trading day, or the securities issuer has a major event that affects the securities price, so that the impact of potential valuation adjustment on the fund's net asset value on the previous valuation date exceeds 0.25%, the recent trading market price should be adjusted with reference to the current market price and major changes in similar investment products to determine fairness.
How to value the suspended stocks?
In the Reference Method of Fund Valuation Working Group of China Securities Association on the Valuation of Suspended Stocks, four methods are put forward, namely, index income method, comparable company method, market price model method and valuation model method. Generally speaking, most fund companies use the index income method, that is, refer to the AMAC industry classification index (AMAC industry index for short) to evaluate the suspended stocks. In other words, the fluctuation of industry index during the suspension period is regarded as the fluctuation of suspended stocks to determine the fair value of the current period. This method is simple and transparent.
Third, the change and analysis of LeTV's valuation
1
The first stage: 30 billion
Letv increased its net profit from 70 million to 250 million by hoarding high-quality content assets, self-built film and television media and a number of mergers and acquisitions. With a price-earnings ratio of nearly 1.20 times, the market value has increased from 654.38 billion yuan to 30 billion yuan.
2
The second stage: 80 billion
Letv recast the new era radio and television network and terminal system, with the net profit increasing from 250 million yuan to 360 million yuan, the price-earnings ratio from 120 times to 220 times, and the market value from 30 billion yuan to 80 billion yuan.
three
The third stage:150 billion
Letv has built an open and closed-loop ecology of "platform+content+terminal+application". The estimated net profit is 370 million yuan, the P/E ratio is increased from 220 times to about 420 times, and the market value of 20 15 exceeds10 billion yuan in the first half of the year.
According to the market value calculation formula, the market value of an enterprise is mainly affected by net profit and price-earnings ratio. In terms of net profit, according to LeTV's financial statements, the main sources of its net profit are not much different from those of most video websites, and they all come from advertising business, membership and distribution business, while the two indicators of user scale and playing time are the core indicators of the industry's profitability.
Compared with cash flow method and other market methods, the adoption of P/E ratio method by enterprises is not only gradually recognized by the capital market, but also helps enterprises to start from industrial operation and capital operation represented by net profit and P/E ratio, and more clearly helps enterprises to improve market value through active operation.
LeTV.com is an authentic "internet plus" concept stock. Mainly engaged in network video related business, covering terminal business, membership and distribution business and other businesses. The cost method emphasizes the evaluation of physical assets, while LeTV is more intangible assets. The income method pays attention to the reliable prediction of future income. As a combination of Internet and cultural media, LeTV's revenue forecast is difficult, so neither method is applicable. Market method needs many comparable enterprises and quantifiable factors, and the industry where LeTV is located can just meet this point, and this method is indeed used in the practice of this industry.
Figure 2: LeTV's net profit and growth rate in recent years
Figure 3: Comparison between LeTV's P/E ratio and the stock market
Source: Sina Finance and LeTV's annual financial report.
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Influencing factors of letv's net profit
1. Core competence
Establishing content library in leading industries is the basis of attracting users and increasing on-demand content. As an eco-enterprise with the mode of "platform+content+terminal+application", LeTV's core business is content assets. But it pays more attention to attracting users and increasing clicks through excellent content assets than video websites in the same industry.
According to the statistical report released by comScore, an Internet statistical company, LeTV ranks first in the industry in terms of daily average UV, monthly broadcast volume and total broadcast duration of VideoMetrix video websites of 20 15 and 12. This core ability to focus on the construction of high-quality content library has enabled LeTV's user scale and clicks to continue to increase, which is also the basis of its main business income and net profit.
2. Business model
The high-barrier, difficult-to-replicate and collaborative business ecological model enhances the stickiness of user groups, maintains the steady growth of user scale and on-demand duration, and thus improves its net profit. Through the strategy of "endogenous first, supplemented by extension", LeTV has spontaneously cultivated unicorns such as LeTV Pictures and LeTV Sports, launched super tv and built LeTV Finance. Letv's seven sub-ecosystems of Internet, content, big screen, mobile phone, automobile, sports and finance have blossomed in an all-round way, and finally an open closed-loop ecosystem of "platform+content+terminal+application" has been formed.
Compared with competitors in the same industry of various sub-eco-companies, LeTV's advantage lies in bringing more convenient and preferential services to users through ecological collaboration, enhancing user stickiness, thus increasing new users and on-demand time. In addition, this business ecology does not cross the business ecology of domestic Internet giants such as BAT, which makes LeTV have no strong competitors in a short time, and is also an important factor for the rapid growth of user scale and video-on-demand duration. Therefore, its main business income continues to grow, and its net profit is also growing.
3. Stock market cycle
Letv carries out industrial layout and business model innovation in advance according to the periodicity of the stock market, and uses the power of the stock market to improve the price-earnings ratio of individual stocks to achieve the purpose of increasing market value. As shown in Figure 2, during the period from August, 20 10 to May, 20 15, the price-earnings ratio of LeTV was basically similar to that of Shanghai Stock Exchange (comparable), Shenzhen Stock Exchange (comparable) and Growth Enterprise Market (comparable), especially reaching their respective peaks in May, 20 15 and 2065438.
According to the data of Value500, from 2002 to 20 15, the trend of P/E ratio of China A-share market was almost synchronous with that of China stock market, which reflected that the trend of P/E ratio of individual stocks was positively correlated with the overall trend of the stock market. Letv took a fancy to this. Before the arrival of the stock market peak, we should innovate the industrial layout and business model in advance, so as to obtain a higher P/E ratio during the bull market.
Reasons for the change of LeTV's valuation
1
20 yuan/share rose to 32 yuan/share at the end of 20 14 in the middle of 20 13, and even touched 55 yuan/share during this period.
The income increased from 238 million yuan at the end of 20 10 to 68190,000 yuan at the end of 20 14;
For the first time, a series of plans were put forward to build cars, mobile phones and televisions.
2
From 20 15 in 10 to 1 2 in May, LeTV's share price rose from the initial shortage of 33 yuan/share to the highest 179.03 yuan/share, an increase of 4.5 times.
Objectively: A-share 20 14 is a "big bull market" in the second half of the year.
Subjectively: Jia Yueting returned to China at the end of 20 14, which made investors see the foundation of LeTV's steady development and increased their confidence.
three
20 16 is the third valuation change that letv has encountered. Although it was suspended for half a year due to the reorganization of LeTV, the stock price did not significantly boost after the resumption of trading.
Letv financing failed;
After Jia Yueting voluntarily disclosed that the "LeTV Department" had financial problems, the injection of LeTV was suspended.
It is worth noting that from July 8 to 10, as many as five public offerings lowered the valuation of LeTV, with the lowest being 22.05 yuan/share of E Fund. More than 20 fund companies have announced that their funds have lowered the valuation of LeTV. Generally, it is valued according to the "three down limits" of the closing price before suspension, and the most pessimistic fund companies are valued according to the "four down limits".
Figure 4: List of fund companies that lowered LeTV's share price.
Source: Hexun.com.
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Letv's intangible assets are 680 million, of which copyright fees account for the largest proportion. Letv uses the average life method to amortize intangible assets, and Youku Tudou uses the accelerated depreciation method. It should be noted that the copyright of TV series and movies is time-limited, and there are some unreasonable places in the average age method. Letv used "reasonable amortization" in its financial report. In fact, it is easy for us to understand LeTV's practice. Originally, the terminal cost and management expenses were more invested in the early stage. If the intangible assets are amortized by accelerated depreciation method, the upfront expenses will be more, which will make LeTV's already declining profits worse. However, in doing so, LeTV makes the amount of losses hidden in the copyright fee unknown.
2. Handling of R&D expenses
Table 2: Excerpts from LeTV's R&D expense report
Source: letv's 20 16 annual financial report.
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The capitalized R&D expenses of 20 16 have been greatly improved, and the net profit has also been improved. However, from 20 13 to now, in 20 13, LeTV capitalized 202 million of the 337 million R&D expenses, and its net profit for that year was 232.38 million yuan. These more than 200 million scientific research achievements become the company's book assets in the form of system software or non-patented technology, with an annual amortization of 20 million. 20 14 year net profit1280,000 yuan, and the capitalization development expense reaches about 500 million yuan. By 20 15, the R&D expenses will increase to190,000 yuan, and the capitalization of R&D expenses will be accompanied by changes in net profit.
Verb (abbreviation of verb) Analysis of the profit quality of LeTV
Improper earnings management in related party transactions refers to that some enterprises use their control or influence on related parties to engage in transaction fraud that violates market fairness. Related purchase and sale, capital exchange, related guarantee and asset reorganization are all common modes of enterprise earnings management. With regard to earnings management, the data of main business income, main business cost, other business profits and total profits can be compared and analyzed with the data of the company in the previous year and related enterprises in the same industry, and the rationality of its operating results can be tested by excluding exceptional factors combined with the development of the industry in which the enterprise is located. If the accounts receivable of enterprises increase substantially, and enterprises do not have substantial strategic cooperation and value-added, it may hide the problem of inflated sales.
Focusing on the financial statements of LeTV 20 16, we can see that:
Table 3: Excerpted from LeTV Accounts Receivable Report
Table 4: Excerpts from other accounts receivable reports of LeTV