Articles

Comparing Company Valuation Before and After IPO Study Case PT Pertamina Geothermal Energy Tbk

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Affordable energy resources of energy play a crucial role in economic and social development to support food production, availability of water supply and sustainable healty lifestyle. In order to avoid long-term scarcity resulting from the continuous use of non-renewable energy sources, we must explore all potential renewable energy source that align with concernes about climate change and other environmental issues. As a continuation of the Indonesian government’s efforts to generate clean and environmental friendly energy, PT Pertamina Geothermal Energy (PGE) was established in 2006. It has contributed 82% of the installed geothermal energy capacity in Indonesia. By leveraging Indonesia’s location within the Ring of Fire as one of the world’s geothermal energy hubs, PGE has been supplying electricity to more than 2 million households in Indonesia with a potential emission reduction of 9.7 million tons of CO2 per year. To achieve sustainable business growth, PGEO is optimizing production in its operational areas by expanding installed capacity. In the company consideration, IPO is an appropriate step to financing the expansion. The author compares the company’s value before and after the IPO to determine the short-term impact of the IPO, helping investors gauge their confidence in making investment decisions in PGEO.

This study utilizes secondary data from prospectuses, financial statements, annual reports, sustainability reports, company-published documents, as well as data from IDX.co.id and IDN Financials.com. The data was collected and analyzed to understand evaluate financial performance, and assess the company’s value before and after the IPO. The calculation of the company’s intrinsic value is conducted using the Discounted Cash Flow Valuation method for the pre-IPO period against the company’s financial projections for the years 2019 to 2022 and for the post-IPO period against the company’s financial projections for the years 2024 to 2028, using discount rates of 8.25% and 8.65% for each. In resulting the intrinsic value pre-IPO is IDR 1.141,28 and the intrinsic value post-IPO is IDR 1.300,86. The stock price of PGEO at its IPO on February 23, 2023, was IDR 875, while the adjusted closing price on December 29, 2023, was IDR 1,170. This study founds that the market price of PGEO’s stock, both before and after the IPO, are overvalued.

Valuation and Financial Performance Analysis of Pt. Indika Energy

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According to a coal market update study by the International Energy Agency, coal prices have been highly volatile during the previous five years, significantly influencing Indonesian coal companies’ operations and substantially impacting income and stock values. Furthermore, the increased global attention to addressing climate change is anticipated to lead to stricter enforcement of carbon emissions laws by 2030. PT. Indika Energy is an energy company that highly relies on coal prices, accounting for 75% to 88% of its revenue. Indika has stated four strategies, two of which are Efficiency and Synergy Optimization, and Prudent management. However, the result of profitability performance is not aligned with the company strategy. This research proposes to evaluate the comprehensive financial performance, assess the intrinsic value using the DCF-FCFF approach, and estimate PT’s price-to-earnings (P/E) ratio and Market to Book (M/B) ratio. Indika Energy. This study uses several ratios, including liquidity, profitability, activity, and leverage ratio. The study revealed that the company demonstrates the worst liquidity performance and is the least profitable among its peers. However, the company has managed to maintain the most significant leverage ratio. According to the DCF valuation, the company appears to be undervalued, with an intrinsic value of IDR 3,247, while the market value is IDR 1,540. The company is also undervalued based on its relative valuation metrics. It has a price-to-earnings ratio (PER) of 1.06 and a price-to-book value (PBV) of 0.45, compared to the industry average PER of 5.15 and PBV of 5.27. Hence, the company should minimize its reliance on subcontractors by optimizing its cost structure.

Financial Performance Analysis and Valuation Assessment of Pt Bumi Resources in Comparison with Pt. Adaro Energy Tbk. and Pt. Bukit Asam Tbk. For Period of 2017-3rd Quarter of 2022

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Indonesia is the third largest country in the world producing coal products. PT. Bumi Resource Tbk. (BUMI) is a coal industry company with the highest market capital, but its financial performance is not good when viewed from its net income in the 2017-3rd quarter of 2022. Financial ratio analysis is used to evaluate the company’s financial performance. This analysis uses the provisions of the ministry No.KEP-100/MBU/2002 which is divided into 4 factors, namely profitability, liquidity, activity and solvency ratio. Economic Value Added (EVA) and FCFF valuation are the methods used in this research. For external analysis, researchers use PEST analysis.
The researcher found that BUMI’s financial performance was categorized as an unhealthy company based on its financial ratio analysis with an average rating of B. Based on the EVA method, BUMI’s financial performance was considered not good considering that its value was always negative. From the FCFF valuation, the Intrinsic Value of BUMI is IDR 250.29 when the current price is IDR 147. So, the BUMI company is concluded to be undervalued.

The Financial Performance and Stock Valuation of Coal Mining Company in Indonesia (Case Study: Pt. Abm Investama Tbk (ABMM))

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Indonesia, the world’s largest supplier of coal, may profit from the uncertainties surrounding the present geopolitical situation. According to experts, the current high price of coal could be stable through the end of 2022, before declining moderately in 2023, but remain well above its five-year average. Therefore, investing in coal companies’ stock right now is a good idea. Theoretically, investing in the stocks of any firm whose primary business is in the coal industry will result in a profit. The issue is deciding which stock to purchase to increase the portfolio’s return. Value investing, often known as finding an undervalued firm with a great potential for growth, is the main goal of the research. The first step of this study is to observe the coal mining sector, and analyze the problem that occurs. Then, a simple screening valuation method using PBV and PER is conducted to choose the appropriate company to evaluate. Next, external factor analysis using PESTEL analysis and Porter’s Five Forces analysis is conducted. Afterward, internal factor analysis using Financial Ratios and F-Score is conducted to evaluate the problem that lies within the company. Finally, to summarize, SWOT analysis is conducted to analyze the advantages and disadvantages of the company’s business environment that provide a thorough knowledge of the company’s competitive advantages. Furthermore, an absolute valuation method is carried out to produce the company’s intrinsic value. The financial performance of ABMM when viewed from its financial statement from 2017 – 2021 is strongly increased in 2021, but stagnant in 2017 – 2020. After obtaining the valuations result through three absolute valuation method, the normalized earnings valuation shows an upside of IDR 2,317 or  77%, the DCF valuation shows an upside of IDR 2,193 or 73%, and lastly, the Monte Carlo Simulation shows an upside of IDR 2,233 or 74%. Therefore, from all three method, ABMM current stock price is considered as undervalued. According on the findings, this study advises purchasing ABMM shares. The present stock price was found to be undervalued using three absolute valuation methods, which means that anyone who purchases the stock at the current price of IDR 3,000 will see a capital gain on their investment.

Financial Performance and Stock Valuation of Tobacco Company in Indonesia Stock Exchange (IDX) Amidst the Hike of Excise Tax Rate Period 2017-2021

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In the tobacco sector, there was a consistent decline in the price of shares outstanding during 2017 – 2021. The consistent decline in stock prices in the market in the tobacco sector initiated the author to analyze the financial performance condition of all companies in the tobacco sector and the stock valuation of companies with the best financial performance compared to other companies. So, it can be concluded that the market price position is now undervalued or still in an overvalued position to be the basis for making investment decisions. In this study, the financial performance of tobacco companies will be analyzed using the method of the decree of the Ministry of State-Owned Enterprises (SOEs) or decree No. KEP-100 / MBU / 2002. This method will result in the health level status (Healthy, Less Healthy, Unhealthy) of each tobacco company each year in the period 2017 to 2021. Stock valuation in companies with the healthiest company predicate from the tobacco sector on the Indonesian stock exchange for the 2017-2021 period. The Stock Valuation that will be used is the absolute and relative method. In the absolute method, the researcher used the discounted cash flow (DCF) method and Dividend Discount Model (DDM). As for the relative method, the researcher used Price to Book Value (PBV), Price to Earnings Ratio (PER), and EV/EBITDA.

Based on PBV, PER, and EV/EBITDA, the intrinsic value of HMSP is Rp. 660.56, Rp. 1,093.53, and Rp. 1,104.57, respectively. DCF generates a result of IDR 1,301.35, and DDM gets IDR 1,375.53. Since only the PBV results reveal overvalued outcomes when compared to the market price, even though the share price is still Rp 915, it can be said that the market price of HMSP’s shares is undervalued. As a result, the researcher suggests investing in HMSP shares. The suggestion is being made because there is a chance for investors to profit from capital gains and dividends because the market price of HMSP is still undervalued in comparison to its underlying worth.