The Study on the Valuation of Taiwan Power Company
Date Issued
2007
Date
2007
Author(s)
Liao, Shyh-Horng
DOI
zh-TW
Abstract
With the prospecting boom of both international and national economy, the demand of power supply increases as the economy grows, especially in the developing countries. However, due to the shortage of global energy supply and immature of renewable energy, the price of traditional energy skyrockets, including coal, natural gas and nuclear fuel. The increase of fuel price will certainly drive up the cost of power generation, which is harmful to the operation of Taiwan Power Company, the leading company in the electricity market of Taiwan.
The amendment of Electricity Act had been submitted to Legislative Yuan for legislating in the end of year 2006. Once the aforesaid amendment being legislated, Taiwan Power Company shall transfer the authority of Electric Supervision，Electric Load Prediction and Electric Transmission Network Supervision to Independent Supervisory Organization(ISO) and will no longer entitle the right of Electric Power Network Supervision. Furthermore, new competitors including New Synthesized Electric Operators、Electric Power Generating Operators、Electric Power Transmission Operators and Electric Power Distribution Operators will also enter the electricity market immediately. In addition to above, Taiwan Power Company shall open Electric Power Purchase Options to Super-High Voltage、High Voltage and Common Voltage Customers gradually, which may result in losing current customers in the long run, especially for High and above Voltage Customers. However, Taiwan Power Company is requested to maintain as a Synthesized Electric Operators and obligated to supply electricity. Therefore, it is still necessary for Taipower to invest heavily in new electricity infrastructure. Alone with the difficulty of adjusting electricity price to reasonably reflect the increase of cost, Taipower thus has to raise the loans for collecting funds of capital investment, which subsequently worsen the financial structure of the company.
In accordance with government plan, Taiwan Power Company will be privatized after the liberalization of electricity market. During the privatization process, Taiwan Power Company eventually has to face various problems, such as the opposition of labor union and the loss of decent employees. It is indeed necessary for Taiwan Power Company to get prepared early.
Facing the aforesaid electricity liberalization, company privatization, and the skyrocket of fuel price, along with the continuous growth of demand on electricity, Taiwan Power Company initiates a ten-year operation strategy. This study is to evaluate and assess the aforesaid operation strategy, and then initiate a simplified financial analysis model to calculate and evaluate the value of Taiwan Power Company through Dividend Discount Model (DDM) of the Absolute Valuation Model. This study at the same time also collects financial statements and related information from seven Japanese power companies, which have similar business environment, scope and product portfolio as Taipower. Based on the data collected, including sales number, revenue, net value of capital, market value, stock prices, equities of shareholders, and stock volumes, the EPS, BVPS, and EBITDA of the above mentioned seven Japanese companies are calculated. Moreover, each company’s value is calculated through P/E, EV/ EBITDA, and P/B method and then evaluated by Synthesized Valuation Model to compare with the outcomes obtained from Absolute Valuation Model. These results are to be provided as reference for valuation of Taipower during the privatization process.
Subjects
台電公司價值評估
電業自由化
經營策略
評價模型
Valuation of Taiwan Power
Liberalization of Electric Industry
Operationg Strategy
SDGs
Type
other
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