Comparable Analysis in Company Valuation: A case study of BYD’s acquisition of Tianqi Lithium

This report performs an in-depth case study of the BYD takeover of Tianqi Lithium using Comparable Company Analysis (CCA) as the key tool for investigating the takeover. The report states specifically the process of CCA methodology from preparing to data gathering all the way to the derivation of the primary valuation multiples as well as how to utilize appropriate calculation methods. By selecting comparable companies such as Ganfeng Lithium and CATL with caution, the report gathers relevant information, makes accurate calculations, and performs an in-depth analysis. The results show that BYD’s CCA-derived share price range is between 63.57 RMB and 148.40 RMB. Even though CCA boasts tremendous advantages, such as its convenience and ease of accessing relevant data, it also possesses certain major flaws. These are its vulnerability to changes in business models and its reliance on historical financial performance, which can limit its accuracy in certain cases. Strategically, BYD’s takeover of Tianqi Lithium will be capable of generating enormous benefits, including ensuring a stable raw material supply, reducing costs, and promoting an optimal industrial chain structure. However, the takeover process is complex and multi-faceted. There are numerous things to be analyzed and a comprehensive analysis with different tools of analysis needs to be conducted. This will enable BYD to make rational, science-driven decisions and become more competitive in the rapidly evolving new energy car industry.