Case study: The Adjusted Valuation of the High-tech Newly-listed Company in Mainland China

Abstract

Given the enormous contribution of high-tech startups to social development, a systematic approach to accurately evaluate these companies is significant for venture capital firms, equity investors, and other investors in the market. However, the conventional methods, including the cost and income approaches, cannot fulfill the valuation goal without any development due to the insufficient financial information and future uncertainty of these firms. This paper investigates a new valuation method that combines the beta coefficient adjustment and future cash flow scenario discussion. This newly established method is employed to value one of the most influential newly listed semiconductor firms: Semiconductor Manufacturing International Corporation in mainland China. If this new combination works well for firms under such circumstances, analytics could apply similar ideas to handle the lack of historical data and uncertainty of future cash flows.