Analysis of Huaxing Yuanchuang M&A Based on PEG and EVA Valuation Model

Abstract

In the process of expanding operations, enterprises often encounter bottlenecks in terms of capital, technology, management, and other aspects. In order to tackle these problems, enterprises often choose to issue bonds, go public, mergers and acquisitions, etc. to expand their production and business scope, update management models, and improve their competitiveness. Due to the short introduction of the merger and acquisition mechanism, the analysis and research of mergers and acquisitions by various enterprises are relatively shallow, and the success rate of mergers and acquisitions by Chinese enterprises is low. This study conducts a research and analysis on the first merger and acquisition case on the Science and Technology Innovation Board, i.e., the case of Huaxing Yuanchuang's acquisition of Olyto. Based on PEG and EVA valuation models, it analyzes the motivation and results of Huaxing Yuanchuang's acquisition of Olyto's business behavior. By valuing and comparing the stock price of Huaxing Yuanchuang before and after the merger and acquisition behavior, the conclusion that the merger and acquisition behavior is not successful is drawn. Research has found that under the PEG valuation model, the stock price of Huaxingyuan Chuang after the merger is slightly overvalued, while under the EVA valuation model, the stock price is greatly underestimated.