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Enterprise Valuation Analysis Based on Grey Prediction Model and Index Selection—A Case Study of Huayi Brothers Media Group

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  • Na Luo
  • Jiangrui Chen
  • Lingyi Kong
  • Yuanfeng Zhu

Abstract

Research on the investment value of enterprises has been a significant area, which the market investors and corporate decision-makers always pay much attention to. In this paper, Huayi Brothers Media Group, the leading enterprise of the film industry, is chosen as the research subject. The paper firstly targeted the difficulties of evaluating Huayi Brothers through analyzing its financial data. Then we used the improved grey prediction method as an absolute valuation model to estimate the cash flow, with relative valuation models, including PE, PB, PS and PEG, as supplements. From the results, we reached a conclusion that these two kinds of valuation models have a similar market value for Huayi Brothers at about 40 billion, which should be reliable when compared with the current average value, about 39 billion, evaluated by 13 official valuation mechanisms. What’s more, the share price of Huayi Brothers in the bull market in 2015 is far higher than the reasonable range of value, and thus we advised that short-term investors have better not make an investment on Huayi Brothers until its share price is in a reasonable range.

Suggested Citation

  • Na Luo & Jiangrui Chen & Lingyi Kong & Yuanfeng Zhu, 2016. "Enterprise Valuation Analysis Based on Grey Prediction Model and Index Selection—A Case Study of Huayi Brothers Media Group," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(8), pages 1-11, August.
    • Handle: RePEc:ibn:ijefaa:v:8:y:2016:i:8:p:11
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    References listed on IDEAS

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    1. Kaplan, Steven N & Ruback, Richard S, 1995. "The Valuation of Cash Flow Forecasts: An Empirical Analysis," Journal of Finance, American Finance Association, vol. 50(4), pages 1059-1093, September.
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    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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