The paper summarizes several factors influencing company valuation from
a global perspective and analyzes valuation issues in China's capital markets.
The study reveals that since 2013, the valuation of core assets in the A-share
market, represented by the components of the CSI 300, has continuously
declined, with state-owned enterprises experiencing particularly severe
undervaluation. This undervaluation is difficult to explain based on factors
such as corporate profitability, growth prospects, dividend payment status, and
risk-taking levels. The paper attributes this phenomenon to several factors.
Firstly, the social value of state-owned enterprises is difficult to reflect in
traditional valuation models using financial data. Secondly, in a situation where
market financing functions are severely imbalanced, a lack of funds leads
investors to choose speculative and new stocks, making it difficult for the
true value of state-owned enterprises to be adequately reflected in the market.
Thirdly, state-owned enterprises lack proactive information disclosure, have a
low level of concern about changes in their market value, and consequently
exacerbate the degree of undervaluation. Fourthly, the loss of merger and
acquisition capabilities limits the opportunities for state-owned enterprises'
external development, leading to a liquidity discount. Fifthly, the irrational
pricing of state-owned enterprise stocks is attributed to the unhealthy
structure of market investors. This study holds significant theoretical value
and practical implications for understanding the phenomenon of undervaluation
of state–owned enterprises and establishing a valuation framework with
Chinese characteristics.
