📖 公司分析综合练习

Equity Investments

I. Lesson Focus

II. The Problem

As an equity analyst, you are given a company with operations listed on both A-shares and U.S. exchanges. Within limited time you must determine its industry position, evaluate its competitive advantages, diagnose financial health, estimate intrinsic value, and decide whether the current market price is attractive. This is the exact skill tested in the Equity Investments section of CFA Level I. This lesson consolidates fragmented concepts through full-length cases, formula review, and eight integrated practice questions so candidates can produce a concise research summary for any company.

III. The Complete Company Analysis Framework

Company analysis sits between industry analysis and valuation. The underlying logic is: the industry sets the ceiling, corporate strategy determines market share, financial ratios reveal execution quality, and free cash flow or relative valuation produces the fair price.

A complete company analysis consists of five sequential steps: 1. Industry and competitive landscape (Porter’s Five Forces, industry life-cycle stage) 2. Business model and competitive-advantage assessment (economic moat, SWOT) 3. Financial statement and ratio analysis (profitability, solvency, efficiency, cash-flow quality) 4. Forecasting future performance (revenue, earnings, free-cash-flow growth assumptions) 5. Valuation and investment recommendation (DDM, FCFF, multiples, comparable-company analysis)

IV. Key Financial Ratios in Company Analysis

Ratios must tell a coherent story rather than stand alone.

• Profitability: $ROE = \frac{\text{Net Income}}{\text{Average Shareholders' Equity}}$. Use DuPont decomposition: $ROE = \text{Net Profit Margin} \times \text{Asset Turnover} \times \text{Equity Multiplier}$.
• Operating Efficiency: Days of receivables = $\frac{365}{\text{Receivables Turnover}}$. An unusually high figure may signal revenue quality issues or channel stuffing.
• Solvency: Interest coverage = $\frac{EBIT}{\text{Interest Expense}}$. A ratio below 2× warrants close scrutiny.
• Cash-flow Quality: Operating cash flow / Net income. A persistent ratio below 1 raises red flags for earnings manipulation.

Numerical Illustration: A firm reports net income of CNY 120 million, average equity of CNY 600 million, producing $ROE = 20\%$. DuPont analysis shows net margin 8%, asset turnover 1.8×, equity multiplier 1.39. The high ROE is driven by superior turnover rather than leverage, indicating sound operating quality.

V. Choosing the Appropriate Valuation Model

• Mature, stable, dividend-paying firms → Dividend Discount Model (DDM): $P_0 = \frac{D_1}{r-g}$.
• Growth or non-dividend firms → Free Cash Flow to the Firm (FCFF) or Free Cash Flow to Equity (FCFE) models.
• Quick screening → Relative multiples (P/E, EV/EBITDA).

In the Gordon growth model, the sustainable growth rate is $g = ROE \times (1 - \text{Payout Ratio})$, and $g$ must remain below the required return $r$.

Worked Cases

Case 1: Mature Consumer Staples Valuation (DDM + DuPont)

XYZ is a stable consumer staples leader. Last year’s dividend $D_0 = 2.50$, expected perpetual growth $g = 4\%$, required return $r = 9\%$, current price = 38. ROE = 18%, payout ratio = 60%.

Step-by-step solution: 1. $D_1 = 2.50 \times 1.04 = 2.60$. 2. Intrinsic value $P_0 = \frac{2.60}{0.09-0.04} = 52$. 3. Conclusion: The stock is undervalued at 38; recommend buy. 4. Sustainable growth check: $g = 18\% \times (1-0.60) = 7.2\%$. Management’s conservative 4% forecast implies ample cash flow and a solid moat.

Case 2: Growth Technology Company – Two-stage FCFE Valuation

ABC Tech generated FCFE of CNY 150 million in 2023 with 50 million shares outstanding. Expected high growth of 15% for three years, then perpetual growth of 5%. Cost of equity = 11%, current price = 45.

Simplified two-stage calculation: - Forecast FCFE for years 1–3 at 15% growth. - Terminal value at end of year 3 = $\frac{FCFE_4}{0.11-0.05}$. - Discount all cash flows to present; intrinsic value per share ≈ 58.7. - At 45 the shares appear modestly undervalued.

Case 3: Integrated Ratio Diagnosis and Relative Valuation

DEF Manufacturing (2023 data): - Net margin 6.8% (industry 9.2%) - Asset turnover 1.45 (industry 0.95) - Equity multiplier 2.1 (industry 1.8) - Trailing P/E = 14.5× (peer average 18×)

Analysis: $ROE = 6.8\% \times 1.45 \times 2.1 \approx 20.7\%$, above the industry 18%. The superior ROE stems from high turnover (strong operations), yet the sub-par margin suggests weaker pricing power or cost control. The below-average P/E combined with above-average ROE points to a potential bargain, provided the margin shortfall is temporary (e.g., raw-material cost spike).

Traps

Key Formulas

• DuPont: $ROE = \text{Net Profit Margin} \times \text{Asset Turnover} \times \text{Equity Multiplier}$
• Sustainable growth: $g = ROE \times (1 - \text{Dividend Payout Ratio})$
• Gordon growth model: $P_0 = \frac{D_1}{r-g}$
• Justified leading P/E = $\frac{(1-b)(1+g)}{r-g}$ (b = retention ratio)
• Interest coverage = $\frac{EBIT}{\text{Interest Expense}}$
• FCFE = FCFF – Interest(1–t) + Net Borrowing

Practice Questions

Q1. A company has ROE of 16%, dividend payout of 40%, and required return of 10%. Using the sustainable growth model, its long-term growth ceiling is closest to:
A. 6.4%　B. 9.6%　C. 10.0%　D. 16.0%

Q2. In DuPont analysis, if net profit margin falls sharply but ROE remains unchanged, the most likely offsetting factor is:
A. A significant increase in asset turnover　B. A large decline in financial leverage　C. Higher tax burden　D. Improved gross margin

Q3. Which assumption is least reasonable when applying the Gordon growth model?
A. Long-term growth of 6% and required return of 8%　B. Dividend payout jumping from 30% to 80% overnight　C. The firm is in a mature, stable phase　D. Beta remains stable at 1.0

Q4. A firm reports operating cash flow of 85 million, net income of 92 million, and a CNY 18 million increase in receivables. This most likely indicates:
A. Excellent earnings quality　B. Possible premature revenue recognition　C. Highly efficient working-capital management　D. Free cash flow must be positive

Q5. Which company type is most suitable for valuation with the dividend discount model?
A. High-growth biotech firm　B. Cyclical steel producer　C. Stable, dividend-paying utility　D. Early-stage internet start-up

Q6. Peer company A trades at P/E of 22× with 11% expected growth; peer B trades at P/E of 18× with 9% expected growth. Using the PEG ratio:
A. Company A is cheaper　B. Company B is cheaper　C. Both appear equally valued　D. Cannot be determined

Q7. A firm’s EV/EBITDA is materially below the industry average, yet its interest coverage is only 1.2×. The most plausible explanation is:
A. Superior operating efficiency　B. Excessive leverage and elevated risk　C. Market is overly optimistic about growth　D. Significant tax shields

Q8. A stock trades at 42. Next year’s expected FCFE per share is 3.2, perpetual growth is 5%, and cost of equity is 11%. Intrinsic value is closest to:
A. 48.0　B. 53.3　C. 42.7　D. 38.4

Answers

Takeaways

• Company analysis is a closed-loop process: industry → strategy → financials → forecast → valuation.
• DuPont decomposition is the single most important tool for diagnosing ROE quality; never rely on the headline ROE figure alone.
• Model selection must match the firm’s life-cycle stage: stable mature firms suit DDM; growth firms suit FCFE or FCFF.
• Cash flow is always more reliable than accounting profit; an Operating Cash Flow / NI ratio persistently below 1 demands investigation.
• Relative multiples (P/E, EV/EBITDA) must be interpreted together with growth, risk, and ROE—isolated multiples are dangerous.
• Sustainable growth g = ROE × retention ratio is the key benchmark for assessing whether management’s growth guidance is realistic.