Articles

Stock Valuation of PT. Bank ABC Tbk.

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PT Bank ABC Tbk aspires to be one of the top 10 global sharia banks in 2025 in terms of market capitalization. As of December 2023, PT. Bank ABC Tbk ranks 13 with 5,18 billion USD in market capitalization. This research aims to examine PT. Bank ABC Tbk stock by using Discounted Cash Flow (DCF) through Free Cash Flow to Equity (FCFE), and Relative Valuation method through the Price to Book Value (PBV), and to determine whether the stock is undervalued or overvalued.

According to Free Cash Flow to Equity (FCFE) valuation result, the intrinsic value per share of PT. Bank ABC Tbk is Rp 37.497 per share, while its share price as of 31 December 2023, is Rp 1.740, indicating that the stock of PT. Bank ABC Tbk is undervalued by the market. This means that the market has not completely recognized the PT. Bank ABC Tbk ‘s ability to generate future cash flows. PT. Bank ABC Tbk’s undervalued stock offers the possibility of returns for the potential investor as the share price rises over time to reflect the intrinsic value per share.

The company’s Price to Book Value (PBV) is 2.07, while the PBV of the average of the company’s peers is 2.72. This means PT Bank ABC Tbk is undervalued ie. the share is underpriced compared to the average of its peers.

Based on the result, this research recommends to buy the stock of PT. Bank ABC Tbk because it is undervalued based on FCFE and based on PBV.

Indonesian Digital Bank Stock Valuation: Case Study of Bank Jago in 2022

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In 2019, in the midst of the early stage of the digital banking industry in Indonesia Bank Arto underwent a transition and rebranded as Bank Jago, a digital bank. As a result of Bank Jago’s transition from a traditional commercial bank into a digital bank, the company’s stock reached an all-time high share price of Rp 19,000 per share in January 2022. This was the highest share price the company had ever achieved. The public’s excitement eventually subsided, however, and this resulted in a decline in the price of the company’s shares. The price per share of Bank Jago was recorded at Rp 4,200 in November of 2022, which was 77% lower than the price recorded in the beginning of 2022.

This research will analyze the financial performance of Bank Jago through the utilization of financial ratio analysis, and to determine the intrinsic value of Bank Jago through the utilization of absolute valuation using the Dividend Discount Model as well as the competitiveness and environment of the Indonesian digital banking industry using PESTEL and Porter Five Forces. From the Porter Five Forces, Indonesian digital banking industry indicates a high level of competitiveness, whilst the industry itself in Indonesia through the PESTEL analysis indicates that it will continue to grow due to the level of support from the political and government factors. According to the analysis of financial ratios, Bank Jago’s profitability has increased significantly over the past three years, as indicated by the rapid growth rate of the NIM, ROE, and ROA ratios since the time of its transformation. With a ratio of 145.86%, Bank Jago displayed a level of liquidity that was unsatisfactory. According to the projections using Dividend Discount Model, Bank Jago’s intrinsic value is currently undervalued by -23%.

Stock Valuation and Financial Performance of Nickel Mining Company in Indonesia (Case Study: PT Vale Indonesia Tbk)

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Indonesia is home to 22% of the world’s nickel deposits, and its restriction on nickel ore exports since 2020 has resulted in significant changes to the supply chains of vital items such as electric vehicles and the stainless steel sector. Approximately 75% of nickel is used in the manufacturing of stainless steel, the most common use of nickel. However, nickel is also essential for the fabrication of electric vehicle (EV) battery cathodes, which are required for the shift to green energy. Current EV battery demand accounts for around 7% of worldwide output, but anticipated increases in EV demand will result in an exponential increase in nickel demand. The exponential increase in nickel demand led to volatility in global nickel prices. Volatility in global nickel prices is affecting companies that operate nickel mining businesses. PT Vale Indonesia Tbk (INCO) is listed on the Indonesia Stock Exchange as one of the nickel mining firms operating in the nickel mining business (IDX). The volatility of the global nickel price is both a breath of fresh air and a problem for the firm. INCO may also participate in and benefit from the rising worldwide demand for nickel in the foreseeable future.

The primary objective of this study is to evaluate the intrinsic value of a nickel mining company in order to assist investors in making decisions in the current market environment. Evaluation of financial performance over the last five years and projections for the next five years using absolute and relative valuation methodologies. The author suggests investors to purchase this stock using a risk-reward assessment suited to each investor’s circumstances and the potential return earned. Referring to the stock valuation evaluation, investors are recommended to purchase if the price of INCO falls below the range of IDR 6,051 to IDR 6,335. When the market price is inside and above the intended range, it is not advisable for an investor to purchase INCO.

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.