How to forecast the price of shares of construction companies. Estimation of the market value of construction work Limiting conditions and assumptions made

Construction machinery and equipment are the most important asset of any construction company. The assessment of this equipment involves an examination, as a result of which its exact cost will be determined. The results of the inspection may be needed when pledging equipment, selling it, renting it out, or simply for accounting purposes.

What construction equipment is subject to assessment?

You can estimate the real cost of any construction equipment. However, there are several main types of technology:

• Equipment for excavation work: earth-moving equipment, soil-compacting machinery or equipment for preparing land for work.
• Handling and transport equipment: lifting mechanisms, loading and unloading equipment, transport equipment.
• Drilling equipment: various excavators, tractors, drilling rigs and other special equipment.
• Equipment for concrete and reinforced concrete works: machines and mechanisms that transport or mix concrete. This also includes equipment for fittings.
• Equipment for finishing work: mechanisms for plastering, painting or roofing work.
• Road equipment: devices for preparing or installing road surfaces.

In what cases is construction equipment assessed?

The need to conduct an examination to evaluate equipment arises in any legal actions related to it. For example, such an assessment is necessary when selling, purchasing or leasing equipment.

An assessment is also necessary when lending or insurance, since the price of equipment affects the amount of payments, contributions, etc. Equipment is assessed when it is written off or the enterprise goes bankrupt.

Conducting an appraisal examination is necessary during legal proceedings for which the cost of the company’s equipment is important.

Plus, with the help of an assessment, company owners can find out the real cost of their accounting equipment.

List of documents required for assessing repair equipment

Before the experts begin their work, you must provide all the necessary documents.

First, you will need documents confirming that you are the owner of the construction equipment. Secondly, prepare a list of all equipment, in which for each piece of equipment indicate the make, model, serial number, year of manufacture and its characteristics. All information must be confirmed, so you will also need passports and documents for all equipment.

If an assessment has been carried out before, you will need the results and the cost of the equipment at that time. You will also need information about the repair of each piece of equipment, if any.

Order an estimate of the cost of construction equipment

The importance of assessing construction equipment is difficult to overestimate. It will not only allow you to formulate a competent pricing policy, but also avoid possible financial losses.

At competitive prices, you can order an examination from our company Soyuz-Expert. As a result of the inspection carried out by our experts, you will receive an official document “Valuation Report”, which has legal force and contains evidence of the value of your equipment.

You can order an assessment or get a consultation in any way convenient for you: write to us by e-mail, call one of the contact numbers or contact our office directly.

Ask a question and experts will answer it.

Many companies, investors and individuals turn to contractors to carry out construction work. In situations where construction work was carried out in violation of any clauses of the contract, all disagreements must be resolved with the provision of certain evidence. And such evidence and other necessary materials can be obtained if you carry out a construction assessment.

Construction assessment is one of the key parts of any investment project. The efficiency from an economic point of view of any project directly depends on the correct assessment of the cost of construction, since the accuracy of pricing affects the payback period of the project and various types of profit. Evaluating the construction of a production hall, for example, in this way makes it possible to calculate in advance the ideal relationship between costs and income.

Estimating the cost of construction is, in fact, the first stage of any construction, which allows us to establish the main costs of constructing a structure. At the same time, a professional construction assessment will allow you to take into account absolutely all the details of the upcoming work, orienting a person to certain costs. Based on a report assessing the cost of constructing a country house, its owner will be able to calculate the required financial investments, and there will be no need to worry about the fact that at any stage of construction it will have to be frozen due to a simple lack of financial resources.

In general, a construction assessment, whether it is an assessment of the construction of a country house or an assessment of the construction of a production workshop, is carried out in the following cases:

• - for the purpose of assessing the organization and construction work being carried out;
• - in order to establish the quality of construction management;
• - in order to determine the quality of work performed;
• - for forecasting the construction completion date;
• - to establish the degree of readiness of a building or structure;
• - in order to determine the reliability of the scope of work declared by the contractor that was performed during the construction process;
• - in order to establish the real cost of the work performed.

The assessment of the cost of construction is carried out on the basis of an agreement with the client, as determined by judicial authorities, by order of investigative authorities, by decision of a notary, which is stipulated in the Law of the Russian Federation “On Notaries”, as well as on other grounds provided for by the existing legislative framework.

Construction cost assessment is carried out by an appraiser who has no interest (property or financial) or dependence on the person or body that appointed the assessment in the results of his work. A report on the assessment of a production workshop or private home is drawn up solely based on the results of the research and assessment activities carried out. The procedure for assessing construction and its volume are determined by the appraiser, taking into account existing standards that stipulate how the assessment must be carried out to obtain the result of the greatest reliability.
The construction cost estimate establishes:

• - how many and what specific materials were used in construction;
• - the need to use additional materials not provided for in the contract;
• - correspondence of the consumption of materials according to the project and their actual consumption;
• - whether there was a replacement with cheaper materials of those materials that were provided for by the project, and so on.

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10.02.2016

When choosing new topics for articles as part of the Educational Education Program for Beginning Appraisers, we try to ensure that the materials are interesting to our readers and have practical benefits. This time it was decided to pay attention to such an issue as assessing the value of construction companies.

The decision was not made by chance, since this issue has its own specifics and a number of nuances. Besides, is the most illustrative example of assessing an existing business in the service sector.

In this article we will tell you which of the three approaches to business valuation can be used to obtain cost of a profitable construction company most consistent with the market.

It may seem that the construction business in Ukraine has completely ruined its reputation and such investments cannot be called anything other than a gamble. The industry was brought into disrepute by a number of high-profile scandals in the capital's market and the crisis that broke out in parallel, with all that it entailed. Today the situation has changed radically.

In fact, it cannot be denied that construction has always been a highly profitable business. And where there is high profitability, there will always be a high level of investment activity.

It is also impossible to deny the fact that purchase and sale transactions of construction companies are carried out quite regularly. But collecting data on these operations seems problematic. The terms and price of transactions are not widely publicized and all information, as a rule, remains within a narrow circle of interested parties.

How to evaluate a construction business unnecessary

The market value of a business can be determined by the cost, comparative or income approach. But in our case, just like in a game of thimbles, there can only be one correct option. And we will start by discarding obviously incorrect approaches.

The disadvantage of the comparative approach is that for a full assessment, reliable information on the sale of similar enterprises is necessary. And as was said earlier, such information is a real shortage. And on the securities market, shares of construction companies are very rare, so Capital market method For a novice appraiser, this will most likely be completely out of place.

Such a veil of secrecy makes this option for assessing a business ineffective. Although, who specializes in this area and has inside information, will certainly show good results in some individual cases. But the comparative approach is clearly not suitable for widespread practical use.

Using a cost approach unacceptable in this case, since the costs of opening a construction company from scratch will be much lower than the market value of an existing construction business of similar scope (that is, with the same material assets).

In fact, the cost of tangible assets of any profitable construction company is a secondary matter. This factor, as a rule, comes to the fore only when, due to the lack of prospects for obtaining new construction contracts or any other, there is a clear threat of bankruptcy and we are talking about sale of business at liquidation value.

Correct assessment of a construction company

Speaking about the prospects, we smoothly approached directly the most rational option for solving the problem. But in order to correctly evaluate the construction business, it is necessary to understand what its main value actually is.

And here everything is, in principle, extremely simple. The core value of a business is the ability to generate profit not only now, but also in the future. And this is possible only if the regional market is promising, the enterprise has a positive business reputation and is competitive.

Assessing the real value of construction company shares is one of the most difficult tasks for an investor. This was always true because they were never traded at their true price. Before the crisis, they were placed at extremely high prices; currently they are quoted significantly below their fundamental valuation. This article is based on conclusions from research into the specifics of several large construction companies. This analysis made it possible to construct an adequate algorithm for estimating the value of their shares.

Why are standard methods powerless against SC?

developers are not amenable to standard approaches to assessment. For example, such an exponent as revenue for an insurance company has no content, since without property revaluation, this index reflects only how actively sales of real estate assets were carried out in a certain period of time. If this indicator for company X is zero, then this means that during the reporting period it was engaged exclusively in construction, without selling anything on time. On the same basis, it is impossible to forecast the value of shares in the future using traditional ratios (P/BV, P/E, P/S and others).

to predict the price of shares of the insurance company

Based on the above, in relation to construction companies, the alternative is to make a forecast of the book value of a specific insurance company in the future, that is, you need to estimate the market value in the future of the projects that it currently has. Of course, the task is more extensive than standard methods. So, the sources of information on the insurance company should be the following documents: standard financial statements; IC quarterly and annual reports; financial statements according to international standards with comments; expert appraiser's report; information that the insurance company presents to investors; additional open access sources: articles, news feeds, forums, etc. Emerging problems in information processing: As a rule, the standard accounting statements of the insurance company are not consolidated, that is, each construction project is identical to a new legal entity. International reporting standards also create an obstacle: civil engineering projects (they are the ones that prevail in the insurance company’s portfolio) are classified under the heading “Reserves” and are valued at real cost, and not at fair cost. The appraiser's report, published by some companies, contains a complete list of properties with basic characteristics and ratings for each of them. But, firstly, the investor needs the value of the share in the future, that is, the price of the insurance portfolio in the future. Secondly, the parameters by which the cost of objects is derived may be different. What is important for an investor, first of all, is the forecast of changes in the value of real estate and construction projects. Returning to the crisis, we remember that the same experts either did not change prices in their estimates for a number of years (despite changing market trends), or seriously underestimated them throughout the year. Therefore, the reports of such specialists do not deserve trust, and their reports can be taken solely as data about the object and its main parameters (type and class of real estate, work deadlines, location, share of the insurance company in the project and area).

Algorithm for predicting the price of shares of insurance companies

Based on the foregoing, in order to be able to assess the value of shares of a construction company in the future, it is necessary to revaluate the entire volume of real estate of the insurance company and express it in the company’s balance sheet. To do this, you need to perform the following actions: 1. All available information about the objects of the insurance company, required for assessment, is collected. 2. First, all objects are assessed according to their belonging to specific real estate segments. 3. The total value of the developer's portfolio is calculated. 4. We predict the financial position of the company in the future. 5. Forms are drawn up: profit and loss statements, as well as balance sheet. 6. The predicted yield and ownership rate of the securities are calculated. 7. We calculate the generalized return on 1 share. Now let's look at some aspects in detail. Valuation of residential sector objects The distinctive characteristics of this segment is the difference in the time of project implementation and the time of actual sales. You also need to track actual sales according to reporting: for a month, for six months, for a year. Another distinctive point is sales by stages, that is, the difference between the cost at the stage of construction of the object and the market value of the constructed object. It is explained both from the side of the developer and from the side of the shareholder. From the first point of view, this is raising funds for construction. For the shareholder, the discount is fraught with risks. As the property is built, the discount and risks decrease. Ultimately, the object comes down to the difference in the income of the insurance company from sales of apartments and construction costs. Valuation of commercial sector facilities The distinctive characteristics of this segment are: Occupancy rate – part of the areas commissioned from the total area of ​​the facility. Capitalization rate is the ratio of real estate rental and its value (taking into account market conditions). Commercial real estate involves two implementation options: sale and. In both cases, in addition to a discount similar to residential real estate, a discount is implied for the sale of all areas at once, or parts of areas in large quantities. If the premises are to be rented, the proceeds from it are calculated. The volume of a developer's portfolio is the sum of completed objects and unfinished ones. Assessment of objects at the design stage and land When calculating these parameters, you need to understand: Both agricultural land and land for the construction of structures are calculated using the comparative method. The sale of land in suburban settlements is calculated in terms of monetary profit. If the project is not started within the next few years or specific documentation for the object is not received, then it is calculated as land. Various IC business models Some insurance companies conduct additional (usually related) activities in parallel with their main activities. For example, a construction company produces building materials. In this case, the calculation may be different: 1. Additional directions are calculated separately, and as a result, all components are taken into account. 2. Indicators from all types of activities are taken into account in one statement of losses and profits. Generalized assessment of the developer's portfolio At this stage, the following indicators are summarized: Price of unfinished objects. Price of finished objects. Expenses for the construction of facilities. Income from sales of residential space. Income from sales of commercial space. Rental income. At the forecasting point, the first two indicators reflect the balance sheet capital stock in the future. in monetary terms they reflect income minus expenses. Part of it will remain undistributed and will also reflect the book capital of the insurance company in the future. The other part reflects the funds necessary for the company to carry out its activities. Adjustments based on actual reporting of the insurance company At this stage, we proceed directly to drawing up a forecast of the book capital of the insurance company in the future; to do this, we compare it with the current book capital. Only those objects that exist at the beginning of the term are subject to revaluation. The implementation of new objects is not recorded. Next, the volume of financing for the implementation of the activities of the insurance company is calculated. Their implementation is possible through additional issue of shares, sale of objects or debt management. In addition, it is necessary to take into account the insurance company’s tax obligations, including those on sales. And finally, calculating the profitability potential The final parameter of the attractiveness of an insurance company for an investor consists of 2 parts: the ownership rate and potential profitability. The holding rate reflects the return over the long term. Here, each type of real estate is taken into account at its own rate, which is then summed up by their proportions in the developer’s portfolio. Don't forget about the discount adjustment. Potential return reflects profitability in the short term. Here we compare capitalization at the forecast point and capital according to the forecast. Do not forget about the rent of the insurance company and the standard return in the average value. Don't forget about the discount adjustment. Correctly assessing the profitability of an insurance company is a rather difficult task. This is precisely what is associated with the inappropriate behavior of individual investors who deal with the securities of these companies. But, the proposed assessment algorithm is relevant for calculating the real state of affairs in the insurance company - to reduce the risks of an investor who wants to invest his own money in their securities.

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