A Comparative Study of Valuation and Value Drivers: Song Ho Industrial Corporation, Ltd. vs. Chih Lien Industrial Corporation, Ltd.

Steel industry is not only a very important industry in the modern economic society, but also an important indicator to measure the national industrial production. It plays an important part on national development and economic value. This study took Song Ho Industrial Corporation, Ltd. and Chih Lien Industrial Corporation, Ltd. as samples to evaluate their fundamental values. Owing that So Ho is an international company, but Chih Lien is a local company. Therefore, this stufy further to explore whether the important rank is different between the international and local company. This study took the five evaluation methods as follows: Price/EPS ratio, Price/Book-value ratio, Price/Sales ratio, Discounted Cash Flow method (DCF), Market Vale-Added (MVA). The empirical results found that the fundamental value of Song Ho is NT$24.37, and the one of Chih Lien is NT$11.70. This study further to utilize the sensitive analysis to exploe and found that, the most three important value drivers of Song Ho are Gross Margin Rate, the Change of Capital Cost and Sales Growth Rate in rank, and the ones of Chih Lien are the Change of Capital Cost, Gross Margin Rate and Sales Growth Rate in rank. This study hopes that our empirical foundings might provide the guild to the management, help the investors to make their investment decisions and the scholar to do research.[[abstract]]Steel industry is not only a very important industry in the modern economic society, but also an important indicator to measure the national industrial production. It plays an important part on national development and economic value. This study took Song Ho Industrial Corporation, Ltd. and Chih Lien Industrial Corporation, Ltd. as samples to evaluate their fundamental values. Owing that So Ho is an international company, but Chih Lien is a local company. Therefore, this stufy further to explore whether the important rank is different between the international and local company. This study took the five evaluation methods as follows: Price/EPS ratio, Price/Book-value ratio, Price/Sales ratio, Discounted Cash Flow method (DCF), Market Vale-Added (MVA). The empirical results found that the fundamental value of Song Ho is NT$24.37, and the one of Chih Lien is NT$11.70. This study further to utilize the sensitive analysis to exploe and found that, the most three important value drivers of Song Ho are Gross Margin Rate, the Change of Capital Cost and Sales Growth Rate in rank, and the ones of Chih Lien are the Change of Capital Cost, Gross Margin Rate and Sales Growth Rate in rank. This study hopes that our empirical foundings might provide the guild to the management, help the investors to make their investment decisions and the scholar to do research