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Investment Analysis of LNG Storage Facility Development in Indonesia

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The gas industry has had remarkable growth in recent years due to cleaner combustion, and LNG stands at the top of the gas industry as its flexibility and transportability made it an attractive option. Indonesia that has geographical advantage provides natural advantage to become a central player in the global LNG market. However, investment decisions related to new LNG storage facilities are faced with uncertainties and challenges including volatile energy markets, fluctuating LNG prices, geopolitical risks, evolving environmental regulations, and technological changes. This study assesses the feasibility of developing an LNG storage facility in Indonesia. Commercially, it is feasible due to growing LNG demand and Indonesia’s strategic advantages. An LNG storage facility with 180.000 m³ capacity is feasible, showing an NPV of $33.7 million, an IRR of 10.96%, a payback period of 14.61 years, and a Profitability Index (PI) of 1.26. Increasing the tank capacity to 200.000 m³ improves feasibility with an NPV of $44.3 million, an IRR of 11.61%, a payback period of 13.67 years, and a PI of 1.32. Integrating with existing infrastructure further enhances feasibility, yielding an NPV of $77.7 million, an IRR of 14.10%, a payback period of 11.04 years, and a PI of 1.56.

Capital Budgeting Analysis of Broiler Farm Construction in Central Java

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Indonesia, positioned as a prominent emerging market, draws its economic strength from a diverse mix of agriculture, manufacturing, and a thriving services sector. The nation’s strategic location, coupled with abundant resources and a youthful population, forms a resilient economic foundation that has contributed to its sustained growth. One notable sector that plays a pivotal role in meeting the country’s protein needs is the poultry industry. Chicken consumption has risen to 7.41 kilograms per capita yearly, indicating a substantial 9.23% increase from 2020. Against this backdrop of economic vibrancy and shifting consumption patterns, PT.XYZ, a key player in the poultry industry, is strategically positioning itself for expansion. Recognizing the immense potential within Indonesia’s dynamic poultry sector, PT.XYZ is planning to enhance its broiler meat production capabilities through the construction of new broiler chicken farm facilities. This research endeavours to provide PT.XYZ with a comprehensive feasibility analysis for the envisioned broiler chicken farm facilities. The proposed facilities are designed to produce a significant volume, with a capacity of up to 16.8 million chickens annually, equivalent to approximately 29,3 million kilograms of chicken meat per year. The construction timeline is strategically set for two years, spanning from September 2024 to October 2026. The research findings present a compelling case for the feasibility of PT.XYZ’s ambitious broiler farm construction project. Financial indicators reveal a positive Net Present Value, an Internal Rate of Return that exceeds the Weighted Average Cost of Capital (WACC), and a Payback Period of five years, aligning with the company’s strategic plans. These results underscore the financial viability and attractiveness of the proposed expansion.

Financial Feasibility Study in the Construction of the “Katering Nusantara” Project in the New National Capital of Indonesia (IKN) PT. XYZ

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The development of an Indonesia new national capital requires a significant workforce, with over 260,000 construction workers needed for the phase 1 construction between 2022 and 2024. To support this massive undertaking, PT. XYZ received an opportunity to provide catering services for 4,500 employees involved in building the nation’s capital, known as Katering Nusantara. Recognizing the potential of the catering industry as a stimulant for corporate growth, PT. XYZ expanded its product line, from only focusing on inflight catering to remote industrial catering. While the inflight catering business relies on flight availability and aviation infrastructure, the industrial catering segment offers more flexibility and opportunities for growth through participating in tenders at various factories across Indonesia. As part of the study, a financial feasibility analysis will be conducted to evaluate the investment in Katering Nusantara, considering factors such as investment costs and overall feasibility. Financial feasibility study conducted in this project to allow PT.XYZ assess the potential risk and return associated with the Katering Nusantara project. The investment of Katering Nusantara will cost Rp5,275,990,000 and will be funded using debt and equity. In the research reveal that the payback period 3.82 years, with a Net Present Value (NPV) of Rp. 11,647,468,485, a profitability index 2.21, and Internal Rate of Return (IRR) of 45%, which surpasses cost of capital 14.38%. This suggests that PT.XYZ should proceed with the implementation of the Katering Nusantara project. At the same time, it is important to note that the project’s financial performance is sensitive to changes in catering sales prices, emphasizing the need for cost optimization and alternative pricing strategies to mitigate potential fluctuations.

Commercial Building Revitalization in the city of Bandung, A feasibility study on “XYZ Hotel” Bandung

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This thesis explores the feasibility study and potential revitalization of underutilized commercial buildings in Bandung, focusing specifically on the case of XYZ Hotel. The argument contends that many commercial buildings in Bandung remain underutilized, missing out on opportunities to generate higher income by utilizing their full potential. The study employs SWOT analysis and a comprehensive feasibility study to determine the potential of these buildings and propose strategies for their revitalization. The research questions aim to assess the current condition of XYZ Hotel, compare its facilities with competitors, identify alternative functions for the building, and evaluate the feasibility of its revitalization. Through interviews with industry experts and on-site observations, the physical condition of the hotel is evaluated, highlighting the need for significant renovations and upgrades to enhance its appeal and competitiveness. The study also examines the economic feasibility of the revitalization project by conducting a thorough financial analysis. The findings indicate that XYZ Hotel is currently underutilized and faces challenges in terms of outdated infrastructure, lack of modern amenities, and subpar room conditions. Experts recommend a major overhaul of the hotel’s facilities, incorporating modern technologies and amenities to meet the expectations of contemporary travellers. The financial analysis demonstrates a positive Net Present Value (NPV) of IDR 47,701,605,549, an Internal Rate of Return (IRR) of 16,61%, a Profitability Index of 1.90 times, and a payback period of 8 years, affirming the financial viability of the revitalization project. Based on the research findings, recommendations are provided for the building owner, ITB, and potential investors. The owner should carefully select investors who align with the vision and values of the project, considering the historical significance of the building and its potential impact on ITB’s reputation. For investors, it is crucial to understand the constraints associated with revitalizing a cultural heritage building and leverage the historical value of XYZ Hotel as a unique selling point. In conclusion, the study demonstrates the potential for revitalizing underutilized commercial buildings in Bandung, with XYZ Hotel serving as a case study. The proposed strategies and financial analysis provide valuable insights for stakeholders and future researchers interested in similar projects. By revitalizing and transforming underutilized buildings, Bandung can unlock new economic opportunities and preserve its cultural heritage for generations to come.

Feasibility Study for Tugboat Expansion Project Using Capital Budgeting And Sensitivity Analysis (Case Study: PT. ABC)

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The Covid-19 pandemic and the unstable geopolitical environment has highly disrupted the global economy. The turn of events affected businesses sectors differently, due the disruption of the supply chain many industries have to suffer. However, there are sectors that performed well in a very uncertain economic condition. One of the business sectors that flourish during this turbulent time is in the mining sector. The soar in demand for natural resources such as coal, nickel, and construction stones have increased the sector’s operational activity drastically. Being a part of the mining industry supply chain, PT. ABC is a marine transport company that provide delivery services for the minerals by utilizing tugboats and barges. The surge of activity in the mining sector has positively impacted the company. A mining companies has queued up to acquire marine transport services, however it is quite difficult to meet the rapidly demand due to the limited number of tugboats and barges available in the market. To keep up with the market demand, PT. ABC is planning to add and additional set of tugboat and barge to its fleet.

The management’s decision to acquire a new set of tugboat and barge is a sizeable investment for the company. Financial calculations such as the capital budgeting method is needed to support the management’s decision for to invest in the expansion project. Therefore, the objective of this research is to utilize the crucial financial calculations to analyze whether if the expansion plan is worth pursuing.

The research results shows that the expansion project is feasible, by examining the base assumptions by the company’s management. The assumptions consist of the initial investment of Rp 40.500.000.000, an annual growth rate of 8,18%, the assumption of 30 working days for the charter duration, and 10 years useful life of the asset. The project will begin in the year 2023. Furthermore, the sensitivity analysis suggests that the most influential factor for the project’s NPV is the charter rate. Based on the analysis, the minimum charter rate that should be charge to the customer is Rp 834.480.000 per month.

Proposed Capital Budgeting: Should PT.FST Close its Kelambu Division?

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In 2021, the manufacturing industry is Indonesia’s most significant contributor to its Gross Domestic Product (GDP). Within the manufacturing industry, there is a sub-industry called the textile industry. The textile industry in Indonesia is highly fragmented. For instance, there are three niche textile markets: textile for households, textile for clothing, and textile for agriculture. The three segments have different growth of 4%, 7.5%, and 5%, respectively, and this difference in growth rate will create a dilemma for companies. For instance, companies must decide which segment needed to be perused or avoid since each segment will have its opportunities and threats.

PT. FST also faces this dilemma. The differences in each segment’s growth rate are reflected by the company’s sales growth of each product. The sales of plastic products Waring and Benang growth rates are 34% and 52% five years CAGR, respectively. Those are substantial growth compared to the textile products of Kelambu with only 23% five years CAGR. From there, the company’s owner and CEO see a shift in the growth of products sold, from textile products to plastic products. To capture the shifts in demand within the market, he decided to close the Kelambu division to make the company leaner and will be able to focus its resources on the products that will generate revenue the most.

From capital budgeting analysis, the plan of shutting down the Kelambu division will result in a faster payback period of 7.2 years compared to 8 years for the regular cash flow and 8.05 years compared to 8.12 years for the regular cash flow the discounted cash flows. More importantly, it generates a higher NPV of IDR 1,087 bio than IDR 976 bio. In addition, the plan also has a higher Profitability Index and IRR of 6.04 and 25% compared to 5.01 and 22%. From risk analysis, the expected value of the project’s is IDR 1,457 bio, with a probability of NPV less than zero is 8%.

Lastly, this final project contributes to the literature by providing an alternative framework on how to use capital budgeting techniques to compare two expansion plans or closing down divisions within a company. Moreover, other textile industry players, especially SMEs could also refer to this final project if they face a similar dilemma.

Business Opportunity Analysis on Halal Vaccine in the Indonesian Market (Case Study of XYZ Biopharmaceutical Company in Jakarta)

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Vaccine hesitancy is defined by the World Health Organization (WHO) as a behavior influenced by several factors, including issues of confidence (do not trust vaccine or provider), complacency (do not perceive a need for a vaccine, do not value the vaccine), and convenience (do not perceive a need for a vaccine, do not value the vaccine) (access). Muslim consumers are becoming increasingly aware of halal medications in addition to food products. They’re starting to notice the negative consequences of product development, testing, and production, all of which may deviate from halal standards. As a result of this confusion, the general public is beginning to question the sources of their medicinal items.

Conservative Muslims may refuse vaccinations due to worries that some vaccines were obtained from the contents of pigs or porcine, which Muslims are prohibited from eating. Today, a quarter of the inhabitants of the world are Muslims. This figure is expected to grow by 35% over the next two decades, leaping from 1.6 billion to 2.2 billion by 2030. By 2021, the worldwide halal pharmaceutical industry will be worth USD 132 billion. Based on data from the Directorate General of Population and Civil Registration of the Ministry of Home Affairs, the total population of Indonesia is 272.23 million in June 2021. Of this number, 236.53 million people (86.88%) are Muslims.

To turn this hesitancy into an opportunity, XYZ Pharmaceutical plans to build a manufacturing plant for halal vaccines. In this research, the vaccines that will be produced by XYZ are ACYW135 Meningococcal Polysaccharide Vaccine, ACYW135 Meningococcal Conjugate Vaccine, 13 Valent Pneumococcal Polysaccharide Vaccine, and 23 Valent Pneumococcal Conjugate Vaccine. These vaccines are selected due to their close association with halal vaccines for the use case of Indonesian vaccine hesitancy. The objective of this study is to assess the feasibility of the halal vaccine manufacturing plant project through financial methods emphasizing capital budgeting technique, internal study, and market analysis. The result of this study shows that the development of the XYZ halal vaccine manufacturing plant is financially feasible due to the net present value of (USD 81,141,154), internal rate of return of (31.43%), the payback period of 4 years and six months, and the profitability index of (5.06), which in other scenarios testing are all acceptable for this project.

Investment Analysis on the Development of Polymer Modified Bitumen (PMB) Production Plant to support the building of Indonesia Infrastructures

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Indonesia is one of the countries that focuses on infrastructure development to support the areas of connectivity and accelerate economic growth while maintaining the global commitment to GHG emission reduction. In order to support the above objectives, competitive bitumen prices with less GHG emissions are foreseen for the infrastructure’s development. Polymer Modified Bitumen (PMB) is one of the materials that is used for the pavement application that could provide 16.99% less GHG emissions compared to the unmodified bitumen due to their capability to provide similar performance with the thinner pavement layer requirement. There are 3 common PMB production processes recognized in the industry, such as Low Shear Mill Technology, High Shear Mill Technology, and Mobile PMB Plant. The Capital Budgeting technique (NPV, IRR, Profitability Index, Payback Period), internal and external analysis such as PESTEL and Porter’s five forces analysis are used to support the decision making for the right technology selection for the PMB processing plant in order to stay competitive in the Bitumen market. The economic analysis has shown that the low shear technology generates an NPV of IDR 186.573.816.286 with an IRR of 75,90%, the high shear technology generates an NPV of IDR 179.179.736.676 with an IRR of 62,39% and the mobile PMB plant generates an NPV of IDR 243.276.282.784, with an IRR of 68,37%. In addition to the highest NPV, the mobile PMB plant has the full flexibility to be mobilized to any project location, especially in remote areas where other production technologies are not available. Based on the above analysis, the mobile PMB plant is the right technology to be selected for the PMB provision to support the infrastructure development in Indonesia.