Articles

Stock Valuation of PT Widodo Makmur Perkasa TBK by Using Discounted Cash Flow Method and Relative Valuation

/in /by

 The emergence of Covid-19 in Indonesia caused an economic decline in 2019-2020. This also has an impact on the capital market in Indonesia, which is shown by the decline in the Composite Stock Price Index (IHSG) which was seen at the beginning of 2020 at the level of 6,300 and decreased to 3,900 in March 2020. However, the number of investors in Indonesia has increased every year, the same as the increase number of companies that have conducted an initial public offering (IPO) and listed their shares on the Indonesian Stock Exchange (BEI). One of the companies conducting an initial public offering is PT Widodo Makmur Perkasa Tbl. (WMPP) in 2021. This company has the potential to continue to grow knowing that Indonesia’s population is expected to continue to grow at a growth rate of 1.25 percent per year, and the Indonesian economy will grow by 5.31 percent in 2022, exceeding the growth rate in 2021 it is 3.70 percent, and is expected to continue to increase every year. In addition, the urban population in Indonesia is expected to reach 66.6% in 2035 and 70% in 2045. This study aims to find out whether WMPP companies are valued too low or too high using the DCF and Relative Valuation methods. Apart from that, this research also carried out external and internal analysis to see the company’s potential. The method used to analyze external conditions in company analysis is PESTEL and the author uses VRIO analysis to determine internal conditions.

The findings of the study reveal that this company’s industrial sector is attractive to investors because this industry has a significant contribution to the development of Indonesia’s GDP; this can be a trigger for the Government of Indonesia to continue to support this sector. Apart from that, increasing people’s income and the company’s concern for the environment can be an attraction for investors. However, the only problem is disease outbreaks in cows and chickens which can trigger a decline in income.

Based on the result of the VRIO analysis, this company has sustainable competitive advantages such as a large number of assets with quite a lot of production capacity.  This company also has a vertical integration business and diverse products & business units.

The result of the WMPP company valuation based on relative valuation show that the WMPP company has a lower PER, PBV and EV to EBITDA than those of the average of similar companies or can be said to be undervalued. However, the WMPP company’s EV to Sales is higher than that of the average of similar companies, indicating that the stock is overvalued. Furthermore, based on the Discounted Cash Flow (DCF) result, the intrinsic value of this company is IDR -55, but the share price is IDR 50. This shows that WMPP is overvalued.

Stock Valuation Analysis of Technology Sector Companies Listed in Indonesia Stock Exchange in the Year 2018-2022

/in /by

In the year 2018, Indonesia’s equity market experienced an IPO boom where there is a significant increase in the number of companies who went through initial public offering (IPO). In the next years, Indonesia IPO market continue to grow with no less than 50 companies going public each year, rendering Indonesia as the biggest IPO market in Southeast Asia since 2018. Indonesian IPO within the year 2018-2022 is dominated by four sectors, consumer, properties & real estate, basic materials, and technology. Though only the fourth largest IPO sector, the sector grew significantly by 240% and funds raised from technology companies IPO deals comprises 36% of total funds raised from IPO in 2018-2022. However, after a few years of trading, only 3 out of 24 technology sectors company are trading above their initial offering price and closing price of the first trading day. The decline in share price spreads evenly across the technology sectors companies that went public in 2018-2023 despite size and market capitalization. This research aimed to evaluate the values of technology sector companies who went public in the year 2018-2022 and analyze whether their current share price is undervalued or overvalued compared to the true value of the company. This study analyzed two aspects of company value, the relative value and the absolute value. The relative valuation of each sample company is conducted through comparable companies analysis and absolute valuation is conducted through discounted cash flows analysis. The sample of this research comprised of 22 technology sector companies that went through IPO within the year 2018-2022. The data used in this research is secondary data collected from the official website of each sample companies, Indonesia Stock Exchange, and Bloomberg Terminal. Based on the relative valuation conducted through comparable companies analysis, the current share price of NFCX, PGJO, CASH, DCII, EDGE, UVCR, RUNS, WGSH, and WIRG are overvalued in the market. On the other hand, the current share price of DIVA, LUCK, HDIT, TFAS, DMMX, GLVA, WIFI, ZYRX, BUKA, GOTO, AXIO, BELI, and NINE are undervalued in the market. Furthermore, based on the absolute valuation conducted through discounted cash flows analysis, the current share price of NFCX, TFAS, DMMX, PGJO, CASH, DCII, EDGE, RUNS, WIRG, and BELI are overvalued in the market and WGSH is fair valued in the market. On the other hand, the current share price of DIVA, LUCK, HDIT, GLVA, WIFI, ZYRX, UVCR, BUKA, GOTO, AXIO, and NINE are undervalued in the market.

Stock Valuation of PT. Panca Budi Idaman, Tbk. (PBID) based on Free Cash Flow to the Firm and on Relative Valuation

/in /by

The stock valuation of PT Panca Budi Idaman, Tbk. (PBID), an Indonesian plastic packaging manufacturer, is evaluated using the absolute and relative valuation. The absolute valuation is based on Discounted Cash Flow (DCF) method. In relative valuation, PBID is compared to its peers, which in this study are IPOL, PDPP, and TRST. Indonesia’s significant economic growth and the vital role of the plastic industry are noting strong demand for plastic packaging despite environmental challenges and regulatory pressures. Financial performance from 2017 to 2023 is assessed through profitability, liquidity, and solvency ratios, demonstrating PBID’s efficient operations and robust financial health. Future cash flows are projected, discounted using PBID’s Weighted Average Cost of Capital (WACC), and the terminal value is calculated. The intrinsic value is estimated at IDR 3,987 per share, indicating undervaluation compared to the current price of IDR 1,325 per share. Relative valuation compares PBID to industry peers using EV/EBITDA, P/E, and P/B ratios, reinforcing the undervaluation finding. Investment recommendations suggest PBID’s stock as a buying opportunity due to its strong market position and favourable valuation metrics.

Valuation and Financial Performance Analysis of Pt. Indika Energy

/in /by

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.

Stock Valuation and Dividend Policy Decision of PT ELSA INDONESIA, TBK

/in /by

Oil shortages began in 2015 due to underinvestment caused by ESG policy. Oil firms need the funds to finance their new refinery, rig, and exploration since most western countries are switching from oil to alternative energy.

Geopolitical and economic instability, fear of a downturn, and rising inflation have harmed the worldwide Oil and Gas services market Since Russia invaded Ukraine in 2022, oil prices rose to USD122/barrel for WTI and USD128/barrel for Brent. WTI fell to USD80/barrel and Brent to USD86/barrel by 2022, despite mid-year volatility. PT Elnusa Tbk is an integrated oil services company through its subsidiaries, offers services that include geophysical data, drilling, and oilfield services. The objective of this research is proposes to evaluate the financial performance, valuation and making a recommendation for ELSA regarding its cash. Two methods of valuation are utilized to estimate ELSA’s intrinsic value: absolute valuation and relative valuation. Discounted Cash Flow to the Firm (DCF) model is used for absolute valuation, meanwhile Price to Book Value (PBV) and Price to Earning Ratio (P/E Ratio) methods are used for relative valuation. Dividend policy and buyback share projection is conducted to find the best decision for ELSA. By referring to absolute valuation, ELSA’s intrinsic value is estimated at IDR639/share. By referring to relative valuation using PBV and P/E methods, ELSA’s intrinsic value is calculated at IDR 564/share . These numbers are significantly higher than ELSA’s current price at IDR 378/share, thus providing relatively high margin of safety.in the following stage ELSA will keep on paying dividends to the shareholders. With ELSA DPR 33,25% in 10 years ELSA will have 4,756,289 million in 10 years and the cash could be for management risk if a big crisis or force majeure.

Feasibility Study of Student Financing Startup Company for BRI Ventures Investments Study Case of: “Company A”

/in /by

The problem faced by BRI Venture is to determine the feasibility of investing in Company A, a start-up in the student financing market in Indonesia. The valuation of start-ups in Indonesia is difficult, making it challenging for BRI Venture to assess the viability of the investment. This study aims to provide a comprehensive analysis of the factors affecting Company A’s business, both internally and externally, in order to make an informed investment decision.

The study focuses on three key research objectives: (1) to examine the macroeconomic and industry impact on Company A’s business by using Porter’s Five Forces model, PESTLE model, and market sizing; (2) to examine the internal aspects impacting Company A’s business by using the VRIO model; and (3) to determine the valuation of Company A by using the DCF and relative valuation methods.

The findings of the study reveal that the Indonesian student financing market presents both opportunities and challenges. The PESTEL analysis highlights the increasing demand for student loans in Indonesia, creating growth opportunities for the industry. However, the Five Porter framework analysis highlights the intense competition, strong buyer bargaining power, and weak supplier bargaining power, which may make it difficult for new entrants to succeed.

The VRIO Framework analysis suggests that Company A has a number of sources of sustained competitive advantage, including adaptable repayment terms, technological capabilities, and market position, indicating that Company A’s internal situation is strong. The Absolute Valuation and Relative Valuation results indicate that Company A valuation is between $59 million and $73 million.

In conclusion, while the Indonesian student financing market presents a growth opportunity, BRI Venture must carefully consider the challenges and competition in the market before making an investment in Company A. The internal analysis of Company A suggests that it has a strong position in the market, with a range of assets and competencies that can offer a sustainable competitive advantage. The valuation results provide a range of potential equity stake that BRI Venture could ask for if an investment in Company A is made.

PT Garuda Indonesia (PERSERO) Tbk Stock (GIAA) Fair Value Valuation Post Restructuring and Relisting on IDX

/in /by

The financial difficulties experienced by PT. Garuda Indonesia, characterized by its inability to meet its obligations to several creditors, resulted in the temporary delisting of its shares from the Indonesia Stock Exchange (IDX) on June 18, 2021. This situation was further exacerbated by the impact of the Covid-19 pandemic, which led to a decline in revenue due to a decrease in passenger numbers and air traffic.

Garuda Indonesia initiated a restructuring effort through the Postponement of Debt Payment Obligations (PKPU) route with a number of creditors. This resulted in an extension of the payment terms, a conversion of debt to equity, and a modification of the debt structure. The company also implemented improvements to its operational practices aimed at reducing costs. These efforts have produced positive outcomes, including an increase in equity and a decrease in the company’s liabilities.Top of FormBottom of Form Garuda Indonesia also increased the company’s capital through Additional Capital with Pre-emptive Rights (PMHMETD), Additional Capital without Pre-emptive Rights (PMTHMETD) and investment from the government of the Republic of Indonesia through State Investment (PNM).

After completing the restructuring process, Garuda Indonesia (GIAA) shares were free from suspension and were able to return to the Indonesia Stock Exchange (IDX) with an initial price of Rp.204. This study was conducted to determine the fair value of GIAA shares upon their return to IDX in early January 2023. The study utilized two methods: the Discounted Cash Flow (DCF) method and the Relative Valuation method. The DCF method resulted in a fair value of Rp. 165.3 for the shares, implying that the initial issuance value was overvalued by 18.97%. The Relative Valuation method EV/sales ratio, yielded a fair value of Rp. 929 for the shares, suggesting that the current issuance value was undervalued by 355%.

Stock Valuation and Business Performances of Indonesia Health Care Provider Company after Post Covid 19 Pandemics (Case Study of PT. Medikaloka Hermina, Tbk.)

/in /by

The Covid-19 pandemic caused a contraction in the Indonesian economy, as evidenced by the large number of layoffs, and several companies had to declare bankruptcy, but this did not occur for companies engaged in health services, including hospitals. The large number of Indonesians infected with the Covid-19 virus caused hospitals to experience an increase in inpatient admissions, which accelerated the hospitals’ financial performance in a very short period of time. PT Mediloka Hermina, Tbk (HEAL) is a private hospital with the greatest number of branches in Indonesia, all of which are impacted by the Covid-19 pandemic. This is also a positive sentiment among stock investors, as they perceive the health industry sector to have very promising future prospects. Several listed hospital company on the IDX have seen their share prices increase significantly over the past year, including PT. Mediloka Hermina, Tbk, whose share price increased by 197 percent between 23 March 2020 and 23 March 2021. This made the author curious about PT Mediloka Hermina, Tbk’s stock valuation and whether its shares are classified as overvalued or undervalued. This study utilizes secondary data obtained from the annual report of PT. Mediloka Hermina, Tbk as well as idx.co.id and stockbit.com, among others. The data was processed with the absolute valuation method (Discounted Cash Flow) and the relative valuation method (Relative Value) in mind (EV EBITDA and Price Earnings to Ratio). Using the Discounted Cash Flow model, the company’s intrinsic value is IDR 452.80 per share. It has a safety margin of -135 percent relative to the per-share market price of IDR 1,065 as of 31 December 2021. The intrinsic value per share is 688 IDR based on the relative price-to-earnings ratio and relative valuation EV EBITDA of 7.21. Following the evaluation procedure. The author may determine the relationship between HEAL’s fundamental company and its stock price growth.

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

/in /by

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.