SHARE VALUATION OF PT. XYZ TO OBTAIN EXTERNAL COMPANY FUNDING

• Main Author: HELMI (NIM : 29108356); Pembimbing: Erman Sumirat SE.AK.,M.Bus, IMLATI
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/16034
• Institution: Institut Teknologi Bandung

PT. XYZ is a telecommunication infrastructure manufacture company in Indonesia since 1985. Their main revenue generator product is power system for BTS used by telecommunication operators. The company's performance is relatively good, with their revenues rising by 25% ( year 2008) and 26% (year 2009). However, short-term debt has been burdening their previous financial report for years, and the company life is very dependent on it (with a 78% percentage of short term debt from total equity and company debt). Recently, business situation has become a competitive field for PT. XYZ, and the company need to find a new source of external fund to run their daily operation, as well as <br /> <br /> <br /> making new diversification to expand their business line. Valuation is the first step to get the much needed external funds. The valuation process used in this thesis is discounted cash flow (DCF) method, with adjusted present value model. Adjusted present value model is chosen because the company plan to change their debt to value ratio significantly, and this model could present a more accurate result than usingweighted average cost of capital (WACC). Adjusted present value model imply that a company's interest tax xhield is a potential cash flow generator for a firm. Input for this model is the company's projected free cash flow and unlevered cost of equity of 13.16% as its discount factor. The valuation process held result that the company's value is ranging from Rp.545,176,641,033 to Rp. 922,482,743,058 (in worst and best case), with a base case value of Rp.713,532,556,326,-. The highest sensitivity was on cost of good sold (COGS) assumption for 7.75% change in firm value per 1% change in COGS assumption. With those as a base value, the company could choose between using private placement or going public (IPO). PT. XYZ needs to raise a total amount of Rp 243,067,445,270,-. However, IPO would make the current owner share diluted to a level of 63.5%. IPO process involves preparation, submission, rights offering, and listing process. The preparation process started on September 2010, and all the process would be done in June 2010. Total preparation cost of go public process would be around 1.15 to 1.55 billion rupiah, <br /> <br /> <br /> excluding the underwriter’s fee, initial and yearly listing fee in Jakarta Stock Exchange.