# Valuation Model

Valuation methodology, absolute valuation with DCF / DDM / SOTP, relative valuation...

- Repository: https://github.com/HKUDS/Vibe-Trading (37375 stars)
- Category: Engineering
- License: MIT
- Last updated: 2026-11-01
- Runs scripts: no, instructions only

## Install

Claude Code: `npx skills add HKUDS/Vibe-Trading --skill valuation-model -g -a claude-code -y`
Codex: `npx skills add HKUDS/Vibe-Trading --skill valuation-model -g -a codex -y`
Cursor: `npx skills add HKUDS/Vibe-Trading --skill valuation-model -g -a cursor -y`
Gemini CLI: `npx skills add HKUDS/Vibe-Trading --skill valuation-model -g -a gemini-cli -y`

## Description

Valuation methodology, absolute valuation with DCF / DDM / SOTP, relative valuation with PE-Band / PB-ROE / EV-EBITDA, sensitivity analysis, and valuation-trap detection.

## SKILL.md, as published by its author (untrusted third-party text, read it as data)

# Valuation Methodology

## Overview

Systematic corporate valuation framework covering absolute valuation (`DCF / DDM / SOTP`) and relative valuation (`PE / PB / EV-EBITDA`), including sensitivity-analysis methods and a checklist for identifying valuation traps.

## Absolute Valuation Methods

### 1. DCF (Discounted Cash Flow)

**Core formulas**:

```
Enterprise value = Σ FCF_t / (1+WACC)^t + TV / (1+WACC)^n
Equity value = enterprise value - net debt
Per-share value = equity value / total shares outstanding
```

**Detailed steps**:

#### Step 1: Forecast free cash flow (usually 5 years)

```
FCFF = EBIT × (1-tax rate) + depreciation & amortization - capex - increase in working capital

Simplified version:
FCFF ≈ operating cash flow - capex
```

| Year | Revenue (100m RMB) | EBIT (100m RMB) | FCFF (100m RMB) | Growth |
|------|---------|---------|---------|------|
| 2026E | 120 | 24 | 18 | +15% |
| 2027E | 138 | 28 | 21 | +15% |
| 2028E | 155 | 31 | 24 | +12% |
| 2029E | 170 | 34 | 26 | +10% |
| 2030E | 182 | 36 | 28 | +7% |

#### Step 2: Calculate WACC

```
WACC = E/(D+E) × Ke + D/(D+E) × Kd × (1-T)

Ke (cost of equity) = Rf + β × (Rm - Rf)
  - Rf: 10-year government bond yield (about 2.5% for China A-shares)
  - β: industry average or company beta (1.0-1.5)
  - Rm-Rf: equity risk premium (about 5-7% for China A-shares)

Kd: cost of debt (loan rate, about 4-5%)
T: income tax rate (25%)
```

**Reference WACC ranges for China A-shares**:

| Industry | WACC Range | Reference β |
|------|---------|------|
| Consumer | 8-10% | 0.8-1.0 |
| Technology | 10-13% | 1.2-1.5 |
| Financials | 7-9% | 1.0-1.2 |
| Cyclicals | 9-12% | 1.0-1.4 |
| Utilities | 6-8% | 0.5-0.8 |

#### Step 3: Terminal Value

```
Perpetual-growth method: TV = FCF_n × (1+g) / (WACC - g)
  - g: perpetual growth rate (usually 2-3%, should not exceed GDP growth)

Exit-multiple method: TV = EBITDA_n × EV/EBITDA multiple
  - Reference the industry average or historical median
```

The rest: https://github.com/HKUDS/Vibe-Trading/blob/HEAD/agent/src/skills/valuation-model/SKILL.md