【正文】 8 bymaturebeethemargin,ofwhat$.167。$$20profit$,$50*15%capitalcost=capital$20,profit$100 For2turnover==Profitgovernmentchannels,(3)technologycapital,entry:GE? BarrierfinancinggoodmoneyBYDSemiconductor,Precision,Honcostrightindifferential。oreBayMicrosoftprofit2023Sources of abnormal profit? MonopolyJohncapitalCFAII_SS18:oftheoftenmistake:risk(3)intensity),ofrisk(2)(businesseconomywide(WACC):industry167。highinor Growthrightinwhen(invest AbnormalvalueWei,Options 6 bycapitalcost Reduceadvantageoftheg/ROIC167。rIgrowth IncreaseWACCROIConlynew Investcapitalnewreturn(NOPLAT)167。operatingfirm167。ofthetoMMWei,Options 5 by=reinvestmentNOPLAT/ICg/ROICcapitalnewreturnROICROICrate=growthcapitalgcostweighedrateWACCaveragetaxestinterestearningstaxesEBITlessoperating=iswheregrowafirmof2023How to value a firm? TheJohnCFAII_SS18:diversified?Coredreampany??FocusisgrowthcreateresponsibilityStrategiesvaluation?ROARestructuring(Strategy)Why value value??Management(NPV)Wei,Options 3 byWei,Options 2 byBenQ.Aspire,ChinaJassen,executives,generalgovernmentChineseStockHongPekingforexecutivebeenWeiExchange.KongforfewandforbyprojectaalsoSolutions.”“RuleBasedmodel,financialdevelopHSBC“SmartInvest,”modelfinancialatoSenghelpedWeiactivities,thefinancialspecialisedlocalHong Kong Economic Journal,forcolumnaWeiaddition,TaiwanesemarketsandKongon(infourauthorisfinancetoconsiderablehavefinancejournalsinweretheseManyareas.onqualityofahasProf..Asianpricingandmarkets,inempiricalfocusesUniversity.? WithManagement,Schoolvisitingis2023tofromatofvisitingHe1995.MarketsAsianCentreofthebeenhasProf.JuneFebruary2023–JanuaryFinanceDepartmentofActingservedProfessor.towasandAssociateasSchoolHKUSTservinghasJohn1992,? SinceJune1989fromAssociatedasheUniversity,toheoneProfessoranMiamiUniversityservingJune1984fromAssistantasoftheHeinIllinois,UniversityatinhisWei.Wei,Options 1 byCorporate Governance and the Value of FirmsSome Experiences of and AsiaProfessor . John Wei, PhDTel: (852)23587676。 Fax: (852)23581749Email: Department of Finance, HKUST and Visiting Department of Finance, Peking UniversityPrepared for CCER, Peking University November 8, 2023CFAII_SS18:John2023Profile of Prof. . John Wei? Prof.JohnreceivedPhDFinancetheofChampaignUrbana,1984.servedUniversityMississippianProfessorJanuaryto1988.AftertheofasAssistantforyear,movedIndianawhereservedanProfessorJulyto1992.JulyProf.WeibeentheBusinessinitiallyanProfessorlaterpromotedfullHeasHeadtheoffrom2023Augustand–2023.WeialsoappointedDirectortheforFinancialsincewasUniversityTexasAustinSeptemberDecemberandcurrentlyGuanghauofPekingresearchonresearchcapitalderivativesassetofandmarkets,Weiproducednumberhighpaperstheseofpaperspublishedtopinandmadecontributionstheliterature.HeanofbooksChinese)Hongstockwarrantsandstockmarket.InProf.isregularwritertheanewspaperinnews.? OnconsultancyProf.hasHangBankdeveloppersonalplanningcalledandtoaplanningcalledInvestmentHeconductedconsultancyinitiatedHKSARAPECaprojectsHongStock? Prof.haveinvolvedteachingHKUST,University,KongExchange,provincialofficials,corporateXieanDaimler/Chrysler,Mobile,andCFAII_SS18:John2023Value creation and business strategiesValuationCreationQijiaCEOXiushen Zhiguo PingtianxiaManagement team Assets in place Growth opportunityCapital People?Management skills?Vision?Integrity?Corporate governance?Incentives?Restructuring?Competitive advantages?MA (external)?Investment (internal) (ROICWACC)?RDEquity Debt?Central bank?Commercial banks?Investment banks?Mutual funds?Insurance paniesValuation methods?DCF?Comparative measure?ROAInvestors?Timing?Cost of capital (WACC)?Financial engineeringCBCapital marketsObjective/Strategy?Investor behavior?Greed and fear?Cognitive or heuristic bias?Focus vs Diversified (Cisco vs GE)?OEM vs Brand?Low vs high endCFAII_SS18:John2023Value creation via financial strategiesDividend policy:ReinvestmentShareholder valueInvestment decision:Growth optionsFinancing decision:WACCCorporate governance:Asymmetric informationApproaches tovaluationMergers AcquisitionsValue creationROIC WACC?DCFvaluation?Comparablediscipline?Transparency?Independence?Accountability?Responsibility?Fairness?Socialtovalue?InternalWhatyourvspetenceOptions 4 byWei,valueawithconstantrateNOPLATprofitadjusted=beforeand=tax=averageof=ratereinvestment=oninvested==raterICFAII_SS18:John2023How to enhance the value of a firm? Theformula? Howenhancevaluea Increaseefficiency Increaseoninvested(ROIC)167。inprojectwhen167。the(g),= Prolongperiodpetitive(N)167。theof(WACC)CFAII_SS18:John2023Value Drivers? Threedrivers:167。profitonlyROICWACC):theindustry167。(g)reinvestment:thegrowth Risk(1)riskcycle),operating(degreecapitalandfinancing(leverage)? CommonManagersignorecost“equity”O(jiān)ptions 7 byWei,(Highmargin):or(priceservicetheindustry)? Lowoperator:HaiTaiwanDell,(makefrommanagement)? Lowcost:to(1)(2)(patents),distribution(4)protection? Example:margin20%。WACC15%。Capital=times167。everysales,=requiredinvestment$50,of==abnormal=–= Atlevelprofitwillfirmapany?CFAII_SS18:John2023Abnormal profit: Motorola, Ericsson and Nokia19931995 199496 199597 199698MotorolaROIC % % % %WACC % % % %Diff % % % %EricssonROIC % % % %WACC % % % %Diff