Corporate Value Assessment based on the EVA Model and Relative Valuation
DOI:
https://doi.org/10.54097/2ttasr58Keywords:
Gold market; geopolitics; corporate performance.Abstract
As a risk-averse commodity, gold has seen new development opportunities in retail due to factors (e.g., geopolitical risks and conflicts, economic uncertainties, and inflation). Consequently, more and more investors are focusing on the gold retail industry. Evaluating the value of gold retail enterprises using scientific and effective methods is of great significance to both managers and investors. Therefore, this paper uses Chow Tai Seng, a Chinese gold retail enterprise, as a case study. Based on the company's development characteristics, we employ the EVA absolute valuation method and relative valuation methods including P/E, P/B and P/S ratios for valuation. The study finds that although its EVA values show a general downward trend from 2019 to 2023, they remain positive, indicating that the company's overall development is still on track. The development of enterprise valuation theory has gone through the MM (Modigliani-Miller) theory, Free Cash Flow Valuation Model, and the Capital Asset Pricing Model, among others. These theoretical models have gradually improved, and the theoretical system is continuously evolving. By summarizing and reviewing valuation theories and methods, this paper employs the DDM for valuation and the P/E ratio method under relative valuation based on the company's development characteristics. Combining these two valuation methods with the company's actual financial data and relevant value theories, the company can attract investors and address undervaluation by increasing its exposure through modern multimedia channels and enhancing data transparency.
Downloads
References
Tang J. Gold Prices Encounter 'Waterloo': Short-term Consolidation Does Not Change Long-term Investment Value. 21st Century Business Herald, 2024, 4(24): 003.
Xiao S. China's Gold Reserves '17 Consecutive Increases': Foreign Exchange Reserves Stabilize Above 3.2 Trillion USD. National Business Daily, 2024, 4(9): 002.
Jia W. Are Young People Addicted to Gold? Vipshop Sells Out, Chow Tai Fook's Sales Surpass Hermès, Baidu Forum, 2023, 12: 26.
Liao B. Multiple Factors Drive International Gold Prices to Continue Surging." Economic Information Daily, 2024, 4(9): 008.
Gao Y. Research on the Path of Mixed Ownership Reform and Its Impact on the Financial Performance of State-owned Enterprises: A Case Study of China National Gold Group. China Agricultural Accounting, 2024, 34(07): 111-113.
Jiang Z. Chow Tai Seng's Revenue in 2021 Increased by Over 80% Year-on-Year. China Gold News, 2022, 3(22): 007.
Wang F. Chow Tai Seng Chairman Zhou Zongwen: In the Past, Inlaid Jewelry Was the Core Product, Now Gold Is the 'Main Battlefield'." National Business Daily, 2023, 5(26): 004.
Erkan U. Diversification, Hedge, and Safe-haven Properties of Gold and Bitcoin with Portfolio Implications during the Russia–Ukraine War. Resources Policy, 2023, 84: 103791. DOI: https://doi.org/10.1016/j.resourpol.2023.103791
Chen W. Chow Tai Seng Chairman Personally Livestreams to Boost Digital Transformation. China Gems & Jewelry, 2020, 3: 114-115.
Li H, Luo W. LOVE100 Constellation Aurora Diamond Shocks! Chow Tai Seng LOVE100 Constellation Aurora Master Series Debuts Globally in Shenzhen and Antwerp. China Gems & Jewelry, 2021, 5: 102-103.
Downloads
Published
Conference Proceedings Volume
Section
License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.