1、Stocks and Their Valuation-第十組第十組A. The dividend growth modelB. The total corporate value modelWhat is Dividend Growth Model and Total corporate value modelDividend Growth Model Dividend Growth Model is also called the Gordon Dividend Growth Model, the model determine the intrinsic value of the stoc

2、k by calculating the dividend present value that the company pay for the shareholders in the future . It is equal to the sustainable inflows of the future dividends. Dividend Growth Model reveal the relationship between the price of the stock、the expected base dividend 、 the discount Rate and the di

3、vidend growth rate of fixed .The specific formula But in our country ，the model is not use because the assumptions of dividend Growth Model dividends is that the dividends growth at the same growth rate，this is not feasible in our immature stock market.The feasibility in china In fact ,the Corporate

4、 value model is free cash flow to firm discount model ,this model is used to predicte the future free cash flow ,and the enterprise is positive corelation with enterprise free cash flow, so we can use the model to assess the value of a company ,this is why we call it the Total company model(Corporat

5、e value model)Corporate value model In theory , the results of the two model are the same, but in fact,the results are usually not the same. The cash flow cant pay as dividends at all,so the results of the second model is higher than the first .Compare the two modela)Constant growth model 穩(wěn)定增長模型 Equ

6、ation 5-1 is a generalized stock valuation model in the sense that the time pattern of Dt can be anything : Dt can be rising , falling , fluctuating randomly , or it can even be zero for several years and Equation 5-1 will still hold.A .The dividend growth model In many cases , the stream of dividen

7、ds is expected to grow at a constant rate. If this is the case , Equation 5-1 may be rewritten as follows: The last term of Equation 5-2 is called the constant growth model , or the Gordon model after Myron J . Gordon , who did much to develop and popularize it. Growth in dividends occurs primarily

8、as a result of growth in earnings per share(EPS). Earnings growth , in turn , results from a number of factors , including (1)inflation,通貨膨脹 (2)the amount of earnings the company retains and reinvests , 公司留存和用于再收益的收益總額 (3)the rate of return the company earns on its equity (ROE) .公司股權(quán)資本的收益率Dividend a

9、nd earnings growth The constant growth model is often appropriate for mature companies with a stable history of growth. Expected growth rates vary somewhat among companies , but dividend growth for most mature firms is generally expected to continue in the future at about the same rate as nominal gr

10、oss domestic product (real GDP plus inflation) . On this basis , one might expect the dividends of an average , or “normal , “ company to grow at a rate of 5 to 8 percent a year.When can the constant growth model be used? Equation 5-2 is sufficiently general to handle the case of a zero growth stock

11、 , where the dividends is expected to remain constant over time . If g=0 , Equation 5-2 reduced to Equation 5-3:b)Zero growth stock零增長股零增長股票票c) Expected rate of return on a constant growth stock穩(wěn)定增長股票的期望收益率 1.The dividend is expected to grow forever at a constant rate , g. 2.The stock price is expec

12、ted to grow at this same rate. 3.The expected dividend yield is a constant. 4.The expected capital gains yield is also a constant , and it is equal to g. The expected total rate of return , is equal to the expected dividend yield plus the expected growth rate : =dividend yield + g.For a constant gro

13、wth stock , the following condition must hold:kkExample：Assume that Allied Food Products just paid a dividend of $1.15,Its stocks has a required rate of return , Ks=13.4% ,and investors expect the dividend to grow at a constant 8 percent rate in the future.t0t ) g 1 ( DD01231.2421.0951.0430.993Ks=13

14、.4%1.3411.448D0 = 1.15g = 8%find the expected dividend stream for the next 3 years, and their PVs.What is the stocks intrinsic value?What would the expected price today be, if g = 0? The dividend stream would be a perpetuity.50123Ks =13.4%.D0 = 1.15Example : if you buy a stock for a price

15、 P0= $23, and if you expect the stock to payA dividend D1=$1.242 one year from now andTo grow at a constant rate g=8% in the future.What is the expected rate of return?B .The Corporate Value Model 公司估值模型 （the free cash flow method）A firms value is determined by its ability to generate cash flow，both

16、 now and future.Market value of company=PV of expected future free cash flows=FCF = NOPAT Net new investment in operating capital )1 (.)1 ()1 (2211WACCFCFWACCFCFWACCFCFThe steps to find a firms value:1.assume that the firm will experience nonconstant growth for N years,after which it will grow at so

17、me constant rate.2.Calculate the expected free cash flow for each of the N nonconstant growth years,and find the PV of these cash fiows.3.Recognize that after Year N growth will be constant.Therefore,we can use the constant growth formula to find the firms value at Year N.This Terminal valueis the s

18、um of the PVs of the FCFs for N+1 and all subsequent years,discounted back to Year N.Then,the year N value must be discounted back to the present to find its PV at Year 0.4.Now sum all the PVs,those of the annual free cash flows during the nonconstant period plus the PV of the terminal value,to find

19、 the firms value.公司估值模型公司估值模型例例題題：某企業(yè)某企業(yè)2007年利潤表反映實現(xiàn)的凈利潤為年利潤表反映實現(xiàn)的凈利潤為95萬元，補(bǔ)貼收入萬元，補(bǔ)貼收入50萬元萬元(包括企業(yè)增值稅出口包括企業(yè)增值稅出口退稅退稅30萬元和因洪災(zāi)政府專項補(bǔ)貼萬元和因洪災(zāi)政府專項補(bǔ)貼20萬元萬元)；營業(yè)外支出營業(yè)外支出30萬元萬元(為企業(yè)遭受洪災(zāi)的損失支為企業(yè)遭受洪災(zāi)的損失支出出)。經(jīng)分析，預(yù)計從。經(jīng)分析，預(yù)計從2008年至年至2012年企業(yè)年企業(yè)的凈利潤將在的凈利潤將在2007年正常凈利潤水平上每年年正常凈利潤水平上每年遞增遞增1，從，從2013年到年到2017年企業(yè)凈利潤將年企業(yè)凈利潤將保持

20、在保持在2012年凈利潤水平上。企業(yè)將在年凈利潤水平上。企業(yè)將在2017年底停止生產(chǎn)、整體變現(xiàn)，預(yù)計變現(xiàn)值約為年底停止生產(chǎn)、整體變現(xiàn)，預(yù)計變現(xiàn)值約為140萬元。若折現(xiàn)率為萬元。若折現(xiàn)率為10，企業(yè)所得稅稅，企業(yè)所得稅稅率為率為25。要求：評估要求：評估2007年年12月月31日該企業(yè)的價值。日該企業(yè)的價值。（1）正常凈利潤）正常凈利潤=95+（30-20）*（1-25%）=102.5（萬元）（萬元）企業(yè)增值稅出口退稅企業(yè)增值稅出口退稅30萬元，按照國稅萬元，按照國稅退稅法規(guī)，應(yīng)該是退的增值稅進(jìn)項稅，退稅法規(guī)，應(yīng)該是退的增值稅進(jìn)項稅，與所得稅無關(guān)；與所得稅無關(guān)；洪災(zāi)政府專項補(bǔ)貼洪災(zāi)政府專項補(bǔ)貼20萬元，按照國家相萬元，按照國家相關(guān)規(guī)定洪災(zāi)政府專項補(bǔ)貼收入免稅的。關(guān)規(guī)定洪災(zāi)政府專項補(bǔ)貼收入免稅的。（2