What are some ways to analyze the investment value of a listed company?

In the long run, the investment value of a listed company is ultimately determined by its fundamentals. Factors affecting the investment value include internal factors such as the company's net assets and profitability, as well as various external factors such as macroeconomics, industry development and market conditions. When analyzing the investment value of a listed company, it should start from three aspects: macroeconomics, industry conditions and company situation in order to have a comprehensive understanding of the listed company. First, macroeconomic analysis Macroeconomic analysis Securities market has always been regarded as the "barometer of the national economy", is the macroeconomic leading indicators; macroeconomic direction determines the long-term trend of the securities market. Only by grasping the general direction of macroeconomic development can we accurately grasp the overall trend of the securities market and judge the investment value of the entire securities market. When the macroeconomic situation is good, most of the listed companies will have better business performance, and the stock price will have upward momentum accordingly. In order to grasp the trend of domestic macroeconomic development, investors need to pay attention to some important macroeconomic variables. A. Gross Domestic Product (GDP) GDP is a comprehensive reflection of a country's (or region's) overall economic situation and is the main indicator of macroeconomic development. Generally speaking, sustained, stable and rapid GDP growth indicates that the economy in general is developing well, and listed companies have more chances to obtain excellent operating results; if GDP growth is slow or even negative, the macro-economy is in the doldrums, and it is difficult for most of listed companies to have a good performance in terms of profitability. China's economy is growing steadily and rapidly, the GDP growth rate in 2006 was 10.7% year-on-year; the GDP growth rate in the first quarter of 2007 reached 11.1% year-on-year. In the past one or two years, the rapid growth of the performance of listed companies is precisely in the macro-economic continued to improve, the overall efficiency of industrial enterprises to enhance the growth of the background, the rapid growth of China's economy for listed companies to create a favorable external environment. B. Inflation Inflation refers to the sustained and widespread increase in the monetary prices of goods and services. Usually, CPI (i.e. Consumer Price Index) is used as an important indicator to measure the level of inflation. Moderate and stable inflation will have less impact on the share price of a listed company; if inflation continues within a certain tolerable range and the economy is in a boom phase with continued growth in both output and employment, then the share price will also continue to rise; severe inflation is dangerous, as the economy will be severely distorted, the currency will depreciate at an accelerated pace, and the business operations will be severely hit. In addition to the economic impact, inflation may also affect the psychology and expectations of investors, and have an impact on the securities market. CPI is also often used as an important indicator of the government's use of monetary policy tools, this year, China's CPI has been running at a high level, so before and after the release of the monthly CPI data, the market is also widely expected that the government will take measures such as interest rate hikes to curb inflation, which triggers the stock market volatility. C. Interest rates The impact of interest rates on listed companies is mainly manifested in two aspects: first, interest rates are a reflection of the cost of borrowing and lending of funds, and changes in interest rates affect the level of investment and consumption of society as a whole, which indirectly also affects the operating results of listed companies. A rise in interest rates increases a company's borrowing costs, which usually has a negative impact on operating results. Secondly, in assessing the value of a listed company, a frequently used method is to discount its future cash flows using interest rates as a discounting factor, and changes in interest rates will have a relatively large impact on the present value of future cash flows. When interest rates rise, the present value of future cash flows falls, and stock prices fall. D. Exchange Rates Generally, changes in exchange rates affect the prices of a country's imports and exports. When the local currency depreciation, export goods and services in the international market expressed in foreign currency prices will be lower, in favor of promoting the export of domestic goods and services, so the local currency depreciation of the export-oriented company business trends to the positive; imports of goods expressed in local currency prices will rise, the country's imports tend to reduce the cost of exchange rate-sensitive enterprises will be negatively affected. When the local currency appreciates, the price of exported goods and services expressed in foreign currency rises, international competitiveness decreases accordingly, and a country's exports are negatively impacted; imported goods are relatively cheaper, and companies that use more imported raw materials for production have lower costs and higher profitability. At present, the RMB is in the process of gradual appreciation, export-oriented companies, especially the weak bargaining power of the company's profit prospects tend to be bleak, the urgent need for industrial upgrading, improve profitability and international competitiveness of the product; need to import raw materials or part of the production parts of the enterprise, because of its production costs will have a certain degree of decline and benefit; domestic investment products industry can enjoy the benefits of the appreciation of the capital will also be sought after! The domestic investment industry can enjoy the appreciation gains will also be sought after by capital. RMB appreciation, real estate, finance, aviation and other industries will benefit directly, while the textile and apparel, home appliances, chemicals and other traditional export-oriented industries will have a negative impact. Macroeconomic Policy Analysis Under the conditions of market economy, the fiscal policy and monetary policy used by the state to regulate the economy will affect the speed of economic growth and the economic efficiency of enterprises, which in turn will have an impact on the securities market. A. Fiscal policy The means of fiscal policy mainly include the national budget, tax, national debt, financial subsidies, financial management system and transfer payment system. Its types include expansionary fiscal policy, austerity fiscal policy and neutral fiscal policy. Specifically, the implementation of positive fiscal policy has the following main effects on listed companies: - Reducing taxes, lowering tax rates and expanding the scope of tax exemptions and reductions. This will directly increase the income of microeconomic agents and promote consumption and investment demand, thus promoting the development of the domestic economy and improving the operating performance of companies, which will in turn promote the rise of share prices. --- Expand fiscal spending and increase the fiscal deficit. This will directly expand the aggregate demand for goods and services, stimulate enterprises to increase investment, raise the level of output, and improve business performance; it will also increase the income of residents, so that their investment and consumption capacity will be strengthened, which will further promote the development of the domestic economy, and at this time, the share prices of listed companies tend to rise. ---Reduce the issuance of treasury bonds (or buy back part of the short-term treasury bonds). The downsizing of treasury bond issuance reduces the supply in the market, which will lead to more funds shifting to stocks and push up the share prices of listed companies. ---Increase fiscal subsidies. Fiscal subsidies tend to expand fiscal expenditures, expanding aggregate social demand and stimulating increased supply, which improves business performance and pushes stock prices upward. The implementation of expansionary fiscal policy is conducive to the expansion of aggregate social demand, will stimulate economic development, while the implementation of tight fiscal policy lies in the regulation of economic overheating, the impact on listed companies and their share prices and expansionary fiscal policy produced the opposite effect. B. Monetary Policy Monetary policy is the basic policy and basic guidelines on the organization and management of money supply and currency circulation formulated by the government to achieve certain macroeconomic goals. Its regulatory role is mainly manifested in: through the regulation of the total money supply to maintain the balance of aggregate social supply and aggregate demand; through the regulation of interest rates and the total amount of money to control inflation; regulating the ratio of consumption and savings in the national income; to guide the transformation of savings to investment and realize the rational allocation of resources. The tools of monetary policy can be categorized into general policy tools (including legal reserve ratio, rediscount policy, open market operations) and selective policy tools (including direct credit control, indirect credit guidance, etc.). If market prices rise, demand is excessive, and the economy is over-exuberant, which is considered to be a situation where aggregate social demand is greater than aggregate supply, the central bank will adopt a policy of tightening money in order to reduce demand. Conversely, the central bank will use loose monetary policy instruments to increase demand. --- Legal reserve policy. By adjusting the reserve requirement ratio paid by commercial banks, the central bank changes the money multiplier, controls the credit creation capacity of commercial banks, and ultimately affects the money supply in the market. If the central bank raises the reserve requirement ratio, it will reduce the money supply, increase the market interest rate, reduce the demand for investment and consumption, and negatively affect the company's operation, and the company's share price will tend to fall. --- Rediscount policy. Rediscounting policy refers to the policy regulations made by the central bank on commercial banks to raise funds from the central bank with the outstanding bills held by them, which generally includes the determination of the rediscount rate and the eligibility conditions for rediscounting. When the economy is overheated, the central bank tends to increase the rediscount rate or to scrutinize the eligibility for rediscounting, which leads to an increase in the cost of funds for commercial banks, a rise in the market discount rate, a contraction of social credit, a corresponding decrease in the market money supply, and a downward trend in the share prices of listed companies in the securities market. --- Open market operations policy. When the government tends to implement a more relaxed monetary policy, the central bank will be a large number of purchases of securities, so that the increase in money supply, to promote interest rates down, the cost of funds to reduce, thereby stimulating corporate and individual investment and consumption demand, making production expansion, corporate profits increased, and then promote the stock price of companies in the securities market rose. In recent years, China has been adhering to the implementation of prudent fiscal policy and monetary policy, to maintain sustained and stable economic development, to prevent the emergence of "big ups and downs". The recent State Council executive meeting proposed that we should continue to adhere to the implementation of prudent fiscal policy and monetary policy, monetary policy should be moderately tight in a stable manner. Excess liquidity has become a prominent contradiction in the current operation of China's economy, "stable and moderately tight" monetary policy is proposed in an effort to alleviate the contradiction of excess liquidity.