Articles

Project Financing Strategy in the Oil and Gas Downstream Industry (Case Study: The Integrated Oil Refinery and Petrochemical Plant Project at PT ABC)

/in /by

The global oil refinery industry faces challenges such as crude oil price volatility, environmental awareness, and renewable energy trends. Indonesia’s oil consumption is increasing, reaching 1580 million bpd in 2022, but the country heavily relies on imports for domestic demand. The petrochemical industry, crucial for the downstream plastic industry, is forecasted to grow at a 5%-6% rate between 2022 and 2031. However, domestic production capacity is lower than demand, and Indonesian manufacturers are few. PT ABC, a joint venture between Indonesia’s State Own Enterprise and European oil and gas companies, plans to build the first integrated oil refinery and petrochemical complex in Indonesia. This integration will provide economic benefits by sharing feedstocks, products, and utilities, and saving energy costs. However, significant capital investments are required. The research is performed to analysis the feasibility of the capital investment project and to evaluate potential source of fund to finance the project, such as shareholder’s equity, bank loans, and corporate bond. The research will determine the NPV, IRR and Payback Period of the project and compare it from different source of funds. The research performed also evaluate several factors that could influence feasibility of the project. As the result, it shows that at discount rates of 8%, 10%, and 12%, the project is feasible. However, volatility of the crude oil price will give significant impact to the project’s feasibility. In addition, it also recommends PT ABC to choose a mix financing between international bank loans and shareholder’s equity at a 60:40 ratio.

Feasibility Study of Sudut Group’s Hotel and Restaurant Business at Pantai Indah Kapuk 2

/in /by

The hospitality sector significantly impacts Indonesia’s economy, particularly in Jakarta, Bandung, and Surabaya. Sudut Group, known for its successful ventures in Bandung, aims to expand into Pantai Indah Kapuk 2 (PIK 2) in Jakarta. This study evaluates the economic feasibility of this new hotel and restaurant project using capital budgeting techniques such as Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period. The financial analysis shows promising results, with an NPV of IDR 54,881,243,591, an IRR of 19.33%, and a payback period of 6.56 years. Sensitivity analysis and Monte Carlo simulations, involving 1,000 trials, further assessed the project’s risks, showing an average NPV of IDR 44,318,599,606. The research concludes that Sudut Group’s project in PIK 2 is economically viable, offering substantial profitability and growth potential. Comprehensive financial analysis and risk assessments support informed decision-making by stakeholders, emphasizing both opportunities and challenges.

Feasibility Study for Investment as Agent (Case Study: PT. Tirta Chemoil)

/in /by

After the financial sector underwent a dramatic transformation in 2020, primarily brought on by the COVID-19 Pandemic, certain areas of the market have recovered while others are still struggling to recover from the financial losses brought on by the pandemic. Despite the drop of sales, and the growth trend was declining. PT. Tirta Chemoil show a good trend of oil sales that shows it is gradually increasing from 2018 which means that oil industry is generating a good revenue to the company. Thus, being told that there is an opportunity to be an agent of brand R, the stakeholder asked me to do the financial feasibility study to see whether their investment are worth it and able to generate a return in 10 years ahead. The research objectives on this study mainly about the feasibility of the company invest in being an agent for the lubricants oil brand. The feasibility study mainly use the indicator on discounted cash flow (DCF) such as net present value (NPV), internal rate of return (IRR), Profitability Index (PI), and payback period. This feasibility study use sensitivity analysis to see the effect on the change of price and quantity to the generated NPV, also use monte carlo analysis to complete with the simulation analysis. Lubricants industry in Indonesia is growing year to year and projected to generate a constant growth on the next few years. The segmentation is all of the industrial oil, targeting West Java market especially industry that use lubricants as the main component for their machinery, and positioning in a premium grade oil. The generated NPV is Rp 5,394,761,715.48, IRR 46%, PI 5,94, and payback period in 4 years. The conclusion is PT. Tirta Chemoil should take the chance to invest in the new product with lowering the initial investment and Capital expenditure so that the payback period can be faster and it can generate more revenue.

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

/in /by

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.

Business Strategy to Increase the Asset Value of Pt. Martheen House (Case Study: Land in Pattimura Airport, Ambon)

/in /by

PT. Martheen House is the owner of the Idle Assets in North Maluku, Ambon. Numerous project options exist in the vicinity of Asset Idle, including the Pattimura international airport in Ambon, the processing of raw materials from crushed stone, and the surrounding countryside. In addition to numerous project options, Idle Assets also has office space and a total fisheries asset and facility value of Rp 7,761,500,000. In this study, PT. Martheen House intends to devise a plan to raise the selling price of its assets. Alternative projects that boost the resale value of these assets will be analyzed and profitable project ideas will be selected. utilizing SWOT to determine the internal components of an organization PESTLE to study competitors to explain external elements from the company that must be open, Porter’s Five Force to enable the company to overcome the underlying opportunities and dangers in the company’s external environment. After performing a Feasibility Study to establish the alternatives and the US Index to determine the chosen resource, the corporation must maximize capital in the form of Equity, Debt, or both to determine which resource to select. The final step is to determine the internal financial position using Financial Ratio Analysis.The investigation reveals that the chosen alternative project is the crushed stone processing project for Rp. 2.035 billion, the Warehouse Project + small office for Rp. 8.787 billion, and the Transit Hotel Project for Rp. Using loans to finance the implementation of this alternate project is doable. Due to the company’s internal financial predicament, it will implement the first alternative project selected, the crushed stone processing project.

Strategic Investment Analysis for the Gas Station Projects Using Build Operate and Transfer (Case Study: PT Pertamina, Besakih Bali)

/in /by

One of deployment planning from Pertamina is Besakih area in Bali. In this simple requirement, Pertamina need a further study to plan which type of gas stations will be implemented, COCO (Company Own Compant Operate) or DODO (Dealer Own Dealer Operate). COCO was found to be the viable option because DODO facing a major challenge based on the PESTLE and SWOT which is an issue related to government attitude towards greener technology such as electric vehicle.  A several options for funding have been identified and well documented with several restrictions which are equity, loan, venture capital, and build operate transfer. If Pertamina need a new gas stations in terms of only 20% coming from capital (80% loan). Pertamina is not entitled to fund by venture capital as Pertamina is a state own company with rigid regulation. For the deployment of new gas station, the most expensive part is the land, therefore searching the solution through land funding is the most viable option. It was found that the strategy build, operate, and transfer (BOT) is a very interesting option. For the Pertamina, it erases the necessity for buying the land, on the other hand, for the land owner, it is better that their land could be useful for them in the next 15 years before they are getting all the facility transferred. The payback period is only 3,36 years with the IRR of 27,03% which is higher than the WACC. In case of Pertamina taking 80% loan and 20% equity, the NPV will return in the 5th year in start of the investment or 4th year in start of the operation. This strategy opens up new opportunities and solution for the business because it writes out land CAPEX necessity.

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

/in /by

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.