Our Professional Service Categories:
Our valuation services offer full capital market coverage, including valuation consultancy for transactions, valuation for financial reporting (US, Hong Kong or A-share markets, ChiNext and NEEQ), fairness opinions on major transactions, valuation for tax purposes, statutory valuation for corporate restructuring/state-owned assets, valuation for major transactions such as A-share acquisitions/reorganisation/backdoor listing, property valuation for H-share IPOs, fair value measurement of investment properties, valuation for M&A of real estate projects, property valuation for REITs, property valuation for real estate collateral, valuation for disposal of non-performing assets, property valuation for securitisation of other assets, valuation of rental value, valuation of mining concessions/biological assets, correspondence with the Stock Exchange of Hong Kong, future income forecast from asset securitisation products, valuation of private equity fund portfolios and financial modelling.
For economic activities to proceed, China-based companies are required to prepare valuation reports to obtain approval from or to file with different government authorities. Valuation conducted for such purposes are statutory valuation. Pursuant to regulatory requirements of the People's Republic of China (the "PRC"), statutory valuation reports must be prepared by licensed asset valuers qualified by the Ministry of Finance of the PRC.Typically, our statutory valuation is mainly used for the following purposes:
Corporate restructuring refers to the process of a company fully or partly transformed into a limited liability company, or a limited liability company fully or partly transformed into a joint-stock limited company.
ValueLink Valuation provides professional valuation advice on the value of assets under the corporate restructuring by conducting valuation of all assets and liabilities (or total shareholders’ equity) of an enterprise.
Asset valuers in ValueLink Valuation have extensive experience in corporate restructuring valuation. They are familiar with regulations in relation to corporate restructuring valuation, as well as relevant accounting treatments. Therefore, they help provide professional valuation services and advice on corporate restructuring.
Sino-foreign Joint Venture
By conducting valuation of different assets which are commonly found in sino-foreign joint ventures, such as machinery and equipment, property, land, patented technologies, proprietary technologies, copyright, trademark, mining concessions, right of sea area use and equity interest, we provide professional opinions on value of assets in sino-foreign joint ventures.
Asset valuers in ValueLink Valuation are familiar with relevant laws and regulations regarding sino-foreign joint ventures valuation, as well as different valuation skills for various assets of sino-foreign joint ventures. Therefore, we help provide professional valuation services and recommendations for sino-foreign joint ventures.
Corporate Listing (IPOs)
Corporate listing may usually involve various types of valuation, such as the VIE dismantling valuation, the valuation of joint-stock company newly established by asset contribution, the valuation of the joint-stock company under corporate restructuring, the valuation review on previous non-monetary asset contribution and asset reorganization valuation.
Asset valuers in ValueLink Valuation are familiar with the corporate listing valuation business that we know well about the corporate listing valuation requirements specified by securities regulatory authorities, and are familiar with the main difficulties commonly seen in valuation for corporate listing. Therefore, we help provide professional valuation services and recommendations for corporate listing (IPOs), and prepare professional valuation report conforming to the requirements of regulatory authorities.
Material Asset Reorganization and Backdoor Listing
Material asset reorganization and backdoor listing usually involve valuation of assets exchange-in and exchange-out.
ValueLink Valuation provides professional valuation advice for the fair value of assets exchange-in and exchange-out involved in material asset reorganization and backdoor listing by conducting valuation of equity or asset (asset group) at fair value.
Asset valuers in ValueLink Valuation have extensive experience in carrying out valuation of material asset reorganization and backdoor listing. They are familiar with relevant laws and regulations regarding material asset reorganization, as well as the main difficulties commonly encountered in material asset reorganization and backdoor listing process. Therefore, we help provide professional valuation services and recommendations for material asset reorganization and backdoor listing, and prepare professional valuation report conforming to the requirements of securities regulatory authorities.
Non-Monetary Asset-Based Foreign Investments
Non-monetary asset-based foreign investments usually involve valuation of various asset classes used for capital contribution, which include inventories, machinery and equipment, property, land, patented technologies, proprietary technologies, copyright, trademarks, rights of sea area use and equity interest. The valuation should provide professional opinion for the value of assets involved in capital contribution.
Asset valuers in ValueLink Valuation are familiar with relevant regulations and Company Law regarding contributed assets, the accounting treatment of asset contribution and the application of various valuation skills for various contributed assets. Therefore, we help provide professional valuation advice for the fair value of contributed assets, and prepare professional valuation report conforming to the requirements of administrations for industry and commerce.
Corporate Mergers and Spin-offs
ValueLink Valuation provides professional valuation advice for the fair value of assets involved in corporate mergers and spin-offs by conducting valuation of the equity value, and all or part of any assets and liabilities involved in corporate mergers and spin-offs,
Asset valuers in ValueLink Valuation are familiar with relevant regulations regarding corporate mergers and spin-offs, as well as accounting treatments of corporate mergers and spin-offs valuation. Therefore, we help provide professional valuation services and recommendations for corporate mergers and spin-offs.
Corporate Capital Increase and New Share Issuance
ValueLink conducts valuation of different assets for such transaction as capital increase and new share issuance, and provides professional valuation advice for corporate capital increase and new share issuance.
Asset valuers at ValueLink Valuation are familiar with the application of valuation skills of different assets for capital contribution. By analyzing the market environment and the industry environment and the target enterprises’ current status, and adopting reasonable valuation methods, ValueLink provides professional opinions on the fair value of equity of the entity at transaction date, and provides professional valuation services for corporate capital increase and new share issuance.
Equity and Asset Transfer (Swap) of Listed Companies (State-Owned Enterprises)
ValueLink conducts valuation of the enterprise value and asset (asset group) value of the entity subject to valuation in equity and asset transfer transaction, and provides professional valuation advice on the fair value of equity and asset transferred.
Equity and asset transfer (swap) by listed companies (state-owned enterprises) is a common economic activity. Asset valuers at ValueLink Valuation help analyze equity value and asset value by reasonably applying different valuation methods such as the asset-based approach, the income approach and the market approach based on enterprise characteristics and asset characteristics. Therefore, we help provide professional opinions on fair value of equity and asset (asset group) proposed to be transferred by listed companies (state-owned enterprises), and prepare professional valuation report conforming to the requirements of securities regulatory authorities and the filing and audit requirements of SASAC.
Asset Leasing of Listed Companies (State-Owned Enterprises)
ValueLink analyzes the asset rentals involved in asset leasing by listed companies (state-owned enterprises), and forecasts value which could be created within the assets’ lease terms, and provides the leaser and the lessee with fair and equitable price analysis.
Pledge and Guarantee of Assets
By understanding and comprehensively analyzing various factors including the current asset status and economic efficiency of pledged and secured assets, ValueLink help identify the continuous operating conditions of assets within security guarantees terms, and provide professional valuation advice on their fair values.
ValueLink conducts detailed analysis of the litigations in relation to different types of litigations-related assets and then identify specific valuation skills and confirm reasonable and practicable valuation plans, and thus provides litigations-related parties with the fair basis for asset disposal.
ValueLink conducts value analysis of assets during corporate liquidation and dissolution transaction.
Asset valuers at ValueLink Valuation are familiar with liquidation procedures, and have extensive experience in valuation assignments during liquidation and winding up transaction. Therefore, we help choose a reasonable valuation method to offer valuation support for securing the legitimate right of parties related to corporate liquidation and dissolution in strict accordance with the liquidation procedure and laws and regulations.
Disposal of Non-Performing Financial Assets
ValueLink Valuation help provide professional value measurement and value analysis services for subprime loans, doubtful loans and loss loans held by banks, financial non-performing loans acquired or taken over by financial asset management companies, and non-performing assets such as non-performing loans held by other non-bank financial institutions. ValueLink Valuation routinely help provide professional valuation advice on disposal of non-performing assets.
Valuation for Tax Purposes
ValueLink conducts independent, objective and fair estimation on value of assets/liabilities subject of tax to provide valuation support for taxpayers to reasonably calculate tax basis of the subject asset and resulting tax amount. All the calculations and analyses are made in conformity with the requirements from the tax authority.
Valuation of Certain Asset Classes (Land, Property, Mining Concessions, Forest Assets, Rights of Sea Area Use)
1. Valuation of Mining Concessions
Per the requirements of relevant regulatory authorities in the PRC and the relevant regulations of HKEx, mining concessions in mining asset trading are required to obtain a valuation report issued by a professional valuer. The normal workflow of ValueLink is to research and understand mining concessions, collect relevant information and data such as resource reserves, reserves review records, production technique indexes and development and utilization plans, identify the value of exploration rights and mining concessions through professional analysis and calculation.
2. Valuation of Forest Resources
ValueLink provide professional valuation advice for parties related to forest resources by valuating resources specification, structure, condition of forest, objective conditions that may cause changes in resources such as forestation, logging and insect pest per requests.
3. Valuation of right of sea area use
By evaluating factors regarding rights of sea area use including social economy, natural environmental conditions, the basic status of rights of sea area use and its adjacent sea area, relevant production and operation and financial position, trading cases, current status of the sea market development, types of sea area use and status of exploitation and utilization, ValueLink reasonably chooses suitable valuation method such as the income approach, the cost approach, the assumed development approach, the market comparison approach and the benchmark price coefficient amendment approach, in order to provide fair valuation conclusion for parties related to rights of sea area use.
Headed by Mr. Luo Junjun, our chief asset valuer, we have completed a vast number of statutory valuation projects for clients to ensure the smooth proceeding of their transactions. After these years, we have developed unique statutory valuation procedures and capabilities of highly efficient coordination with clients, securities firms, accountants and law firms.
In addition to the above statutory valuation projects in China, we also conduct valuation for companies listed in HK for inclusion in the circular and valuation for companies listed in the US for the purposes of fairness opinions.
Property valuation has played an ever-important role with the development of capital markets and real estate-related financing. In IPO preparation, most registrants are required to value its properties and real estate developers are required to carry out valuation for their fixed assets and inventories in addition to their investment properties. After an IPO, fair value measurement is required for investment properties in every interim report and annual audit report. In property investment or related financing, transaction parties need valuation report of properties at market value or collateral value issued by a qualified property valuer. Therefore, it is obvious that property valuation is in place in a range of areas associated with corporate development.
Led by Mr. Wang Xiaonan, our chief property valuer, our property valuation team provides clients with excellent customized services leveraging their independent perspective, expertise and rich industry experience.
Our property valuation mainly covers the following:
IPO Property Valuation
With respect to the capital markets in China and Hong Kong, companies are required to obtain valuation of various kinds of property at market value they held for IPO reporting or disclosure purposes, including:
Fixed assets: There are two types of fixed assets. The first type is self-owned fixed assets, such as self-owned hotels. The another type is fixed assets for own use, such as office buildings for own use;
Investment property: In terms of completion status, investment property can be classified as completed investment property and investment property under construction. In terms of business nature, investment property includes commercial property, office buildings, industrial property, car parks and other kinds of property which earn rental income;
Developed products, representing all kinds of property which are completed and held for sale, such as residential units, apartments, office buildings, commercial property and others;
Development cost, representing all kinds of property which are under construction and held for sale, such as residential units, apartments, office buildings, commercial property and others.
Property Valuation Used in Circulars
Pursuant to the requirements of the SFC, the CSRC, the Stock Exchange and the stock exchanges of China, listed companies are required to conduct valuation for the property to be acquired or disposed of for material property acquisitions or disposals. The value of the target property and the report thereof would be included in a circular which would be released to all shareholders and market investors in the form of an announcement. A valuation opinion issued by a professional valuation institution would support the fairness of the transaction, showing that the transaction would not harm the interests of the company and minority shareholders.
Fair Value Measurement of Investment Property (IP)
Pursuant to the relevant requirements under the International Financial Reporting Standards (IFRS) and the China Accounting Standards (CAS), the fair value of investment property owned by listed or to-be-listed companies for earning rental income, such as office buildings, commercial buildings, industrial property and car parks, is subject to valuation by professional valuation institutions when the accounting treatment of such property is changed from cost method to fair value. In general, valuation for fair value should be conducted twice a year for the interim and annual reports, and should be reassessed every year. The ability of such kind of property to collect rents has a significant impact on valuation.
Property Valuation for REITs (in China and Overseas)
Companies which intend to issue REITs, no matter in Hong Kong, Singapore or other foreign capital markets, are required to conduct valuation of the property owned by the REITs issuers. Recently, professional property valuation institutions are required to conduct valuation of the relevant property for the issuance of quasi-REITs (real estate investment trusts) in the mainland China. The profitability of the property has a significant impact on the issuance of REITs products.
Property Valuation for M&A
For more and more market transactions, both parties of the transactions are required to conduct valuation of the target property for M&A of a single property or a property portfolio by way of equity or assets.
Property Valuation for Real Estate Investment and Related Financing
In respect of all kinds of finance models for real estate based on mortgage financing of real estate, despite the diversification in organisation structure, loan structure and product types, it is always essential to conduct valuation of the property at market value or mortgage value.
Valuation for Disposal of Non-Performing Assets
Defaults result in non-performing assets in all kinds of market operation, investment in property by financial institutions and credit process of banking financial institutions. The market value or realisable value of the non-performing assets plays an important role in the preservation or disposal process of such assets. Therefore, valuation of such property is particularly important.
Companies often participate in transactions such as equity acquisition, purchase and sale of assets, mergers and reorganizations. A core issue in these transaction is the valuation of assets/liabilities involved. It is normal business practice that companies would determine the consideration by hiring a third-party appraiser or companies may also obtain valuation review on reports issued by another appraiser. Furthermore, when determining the price of certain assets for purposes of deal pricing and deal structuring, companies need financial modelling support. The continuous development of PRC securities markets and bond markets also bring about corresponding assets valuation needs and analysis of future cash flow forecasts for asset securitisation and bond issuance.
Valuation reports relating to transactions are mostly used by the management or boards of directors and are therefore regarded as for internal reference.
Our transaction support services cover the following:
Related Party Transactions, Mergers or Sales of Business, Sales of Subsidiaries or Business Lines;
Capital Increase, Share Buybacks or Privatisation, Down-round Financing;
Asset Disposals or Divestments;
Pricing for ESOP Transactions;
Transactions Requiring Shareholders’ Approval;
Pricing of Certain Products;
Financial Model Development;
Cash Flow Forecasts for Asset Securitization Products;
Valuation for Collaterals in Bond Issuance.
The shift of accounting policies from historical cost-based system to fair value framework has lent popularity to valuation for financial reporting purposes. Our teams in this area includes some of the most experienced professionals in China with member prior career at valuation departments of the Big Four accounting firms or internationally renowned valuation companies. Presently, we have one team in Beijing led by Mr. Dong Yan (Beijing partner-in-charge) and one team in Shanghai led by Mr. Chuan Sun (Shanghai partner-in-charge), whereas our co-founder, Mr. Guangyu Chen, is responsible for general technical support and product development.
For valuations under financial reporting purposes, we serve listed companies or listing candidates (A-share, US and Hong Kong markets) based on their respective accounting standards (CASs, US GAAPs and IFRSs).
Enterprise Equity Value
Valuation of enterprise equity value is, by treating the enterprise as an organic whole, a comprehensive valuation of the fair market value of an enterprise as a whole based on the status of all assets held or owned and overall profitability of the enterprise with reference to the macroeconomic environment and industry background where the enterprise operates.
Valuation of enterprise value is widely used in M&A, share-based payment, asset impairment and other areas. ValueLink Valuation has extensive experience in these areas and is able to provide value-added services for clients by choosing the most reasonable valuation approach with reference to industry prospects, business conditions and other factors.
Intangible Assets (Allocation of Purchase Consideration)
Pursuant to the requirements under the Accounting Standards for Enterprises No. 20 - Business Combinations of the CAS, the relevant Hong Kong/International Accounting Standards (IFRS3) and the Accounting Standards Codification (ASC805), the acquirer is required to disclose the fair values of the assets and liabilities of the acquiree on the date of acquisition (including the assets and liabilities not included in the balance sheet of the acquiree).
Therefore, the acquirer is required to allocate the purchase consideration based on the fair values of the identifiable assets (including all kinds of identifiable intangible assets), liabilities and contingent liabilities of the acquiree obtained from the M&A. The difference in allocation is goodwill.This process is known as Purchase Price Allocation (PPA). ValueLink Valuation can help you:
1. Assess the fair value of the purchase consideration;
2. Determine the type of intangible assets for acquisition and estimate the amortisation period of such assets;
3. value of the identifiable assets for acquisition, including intangible assets and tangible assets;
4. Calculate the goodwill for acquisition; and
5. Analyze the impacts of above calculations on corporate financial statements.
ValueLink Valuation has extensive hands-on experience in valuation of all kinds of intangible assets for clients.
M&A and reorganization of companies often involve complicated financial derivatives such as contingent consideration and warrants. For financing, companies often issue equity instruments such as convertible bonds and preference shares. An increasing number of companies also purchase derivative or structured products for avoidance of risks such as exchange rate fluctuation, interest rate risk and price changes.
Making use of specialised databases, ValueLink Valuation conducts valuation of financial instruments in a professional manner based on the latest development of finance theories, mathematics and computer science.
Valuation services for financial instruments provided by ValueLink Valuation include but not limited to the following:
1. Convertible bonds and bills
2. Preference shares
3. Share warrants
4. Share options
5. Restricted shares
6. Embedded financial derivatives, including extendible options, call/put options
The experienced financial instrument team of ValueLink Valuation always keeps an eye on latest analysis tools, such as Black-Scholes option pricing model, binomial option pricing model, trinomial option pricing model, Monte Carlo simulation, regression analysis model, etc. Moreover, ValueLink Valuation has developed its unique computer applications (by using commercial software such as VB/MATLAB/C++/VBA/CrystalBall etc.) in order to analyse complicated financial instruments effectively.
Assets and Goodwill Impairment Test
There is a huge difference between China Accounting Standards: Accounting Standard for Business Enterprises 8 – Assets Impairment, US Generally Accepted Accounting Principles: ASC 350, ASC 360 and Hong Kong/International Accounting Standard 36 in respect of the accounting treatments for impairment of goodwill and long-term assets.
ValueLink Valuation has extensive experience in valuation of impairment of goodwill and long-term assets, and fully understands the difference between major accounting standards. We can:
Conduct independent review on significant accounting assumptions and profit forecast involved in impairment calculation for the management and auditor’s reference;
Explain to the auditor why to use different valuation methods in different scenario, and explain the discrepancy between the market value of an enterprise and the total value of assessed assets. In practical, it usually takes a long time to complete this kind of analysis, which requires in-depth knowledge of the industry and valuation. Services provided by ValueLink Valuation can help you save your precious time and reduce costs;
Establish a full set of calculation model for future impairment tests and business valuation.
There is an increasing number of listed or to-be-listed companies implementing option-based incentive mechanism to motivate their management. Pursuant to China Accounting Standards, US Generally Accepted Accounting Principles and Hong Kong/International Accounting Standards, share option incentives and share-based payments are required to be measured at fair value in the financial statements. Numerous variables are involved in such valuation, and such valuation requires the use of complicated mathematical model (such as Black-Scholes option pricing model, binomial option pricing model, Monte Carlo simulation).
ValueLink Valuation can prepare valuation reports in full compliance with Accounting Standard for Business Enterprises No. 11, US Accounting Standards (FASB ASC718), Hong Kong/International Accounting Standards (IFRS2) or other accounting standards, thus meeting client’s demand in respect of financial report preparation.
Biological assets refer to living animals and plants, which are classified into consumable biological assets, bearer biological assets and non-profit biological assets. According to relevant rules under International Financial Reporting Standard (IFRS) and China Generally Accepted Accounting Standard (CAS), fair values of biological assets are required to be measured on each financial reporting date. Usually, fair values are measured twice a year at the respective balance sheet date of interim report and annual report, and re-assessed every year. Changes in fair value of biological assets will have a significant effect on financial performance.
Unlike valuation of mining concessions for statutory transactions, the valuation of mining concessions for financial reporting is usually conducted during purchase price allocation and asset impairment test. Such valuation primarily analyses the market transaction data, revenue target and replacement cost, and valuation of the subject mining concession is conducted using cost method, market approach and income approach.
Other Tangible Assets
Other tangible assets are widely used in asset acquisition, asset impairment, corporate merger and acquisition, financial leasing, sale-leaseback and other fields. ValueLink Valuation has extensive experience in dealing with tangible assets commonly found in different industries.
In valuation of tangible assets, the most important thing is to consider the impairment of tangible assets from different aspects including physical condition, technology, function and economic aspect accurately. In this regard, ValueLink Valuation can provide strong support for you with its extensive experience.
Common types of tangible assets
1. Machinery and equipment
3. Mining equipment
4. Oil refinery
Our financial reporting purpose valuation has achieved high recognition in the industry in terms of professional expertise and service capabilities. Over the years, in addition to the performance of valuation engagements, our valuation team is also responsible for communication with auditors, securities firms, law firms and stock exchanges on valuation matters to ensure that our clients can efficiently complete their financial reporting and listing approval procedures.
ValueLink actuarial services (“VAS”) are dedicated to apply the matured actuarial methodology and tools in enterprise risk and financial management, where VAS will assist clients to evaluate the market value of their assets and liabilities more reasonably and more in compliance with existing requirements, to better analyze and quantify the risk factors in existing business process, and to establish more efficient actuarial models for enterprise risk management.
Market Value Appraisal
Evaluate the market value of clients’ assets and liabilities and issue valuation report.
The VAS will use the generally accepted actuarial methods to evaluate the market value of the related assets and liabilities, where the work scope will include data cleansing, establishment of database and actuarial models, finalizing the model assumptions and issue the valuation report.
Evaluate the pricing of the related risk factors and issue opinion on pricing rates.
The VAS will review/analyze the risk pricing scheme of clients’ related products and issue opinion on pricing rates, where VAS will clarify the reasonableness of the risk factors used in pricing and will estimate a reasonable value range for each risk factor.
Insurance Companies’ Reserve Valuation
Professional reserve valuation for insurance companies and issue actuarial report.
The VAS can issue actuarial reports for various insurance companies including life insurance, Property & Casualty insurance and health insurance, where the reports would satisfy auditor and local regulatory requirements.
Risk Modelling Consulting
Assist the clients to establish or perfect the related risk models.
The VAS will establish or perfect the risk models by applying actuarial, statistical and big data technics, such as risk segmentation models for business front end and risk management models for business middle and back end. In addition, the VAS can work with the IT team to implement the risk models in existing operation system so that the clients can improve their risk management abilities.
Business and Financial Management Consulting
Assist the clients to improve their abilities in business and financial management.
The VAS will assist the clients to clean the business and financial data, to set up the analytical database and to establish an efficient set of business and financial analytical reports through applying actuarial and statistical methods. Standard applications can be budget management, expense management, etc. At the same time, the VAS can help clients identify the risk factors in business process through data analysis, so that the clients can improve their controlling on business process.