Stock Valuation and Risk Analysis Report: Real Estate Industry

Abstract

The real estate industry plays a fundamental role in laying the foundation for China's national economic development. Its contribution to driving economic growth, promoting social employment, and optimizing residents' living environments cannot be underestimated. Therefore, objective evaluation of real estate company value is of utmost importance. Investors typically utilize stock valuation models to assess the value of a company's stock. However, the theoretical valuations derived from these models often differ from the market value. This research focuses on an empirical analysis of stock valuation and actual pricing in the real estate sector, using the stock (code: 02007) issued by Country Garden Holdings as the case study. The average price-to-book ratio method is applied to theoretically value the stock, and the resulting valuation is then compared with the actual pricing. The analysis aims to uncover the reasons behind the differences between the two and identify the risk factors involved. The risk factors contributing to a lower stock valuation than the actual pricing is primarily associated with the overall impact of the real estate industry and Country Garden Group's operational risks. This study provides valuable insights for real estate companies seeking to improve their business operations and enhance their value creation capabilities. It also serves as a significant reference for investors when conducting stock valuations.