STOCK VALUATION OF PT CHAROEN POKPHAND INDONESIA TBK: VALUING THE PROSPECT OF AGRIBUSINESS INDUSTRY

• Main Author: FAISAL HILMI 29115133, R.
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/23935
• Institution: Institut Teknologi Bandung

Indonesia's business poultry sector has developed essentially since the mid-1980s. The Indonesian Feed <br /> <br /> <br /> <br /> Producers Association (APPI/GPMT) reports that the division supplies 65 percent of Indonesia's animal <br /> <br /> <br /> <br /> protein, giving employments to 12 million individuals. Indonesia’s poultry industry began to expand, <br /> <br /> <br /> <br /> fueled by a growing economy. Indonesia still has relatively lower meat consumption per capita <br /> <br /> <br /> <br /> compared to other Southeast Asian countries. However, demand is rapidly increasing and poultry meat <br /> <br /> <br /> <br /> is the leading source of protein in the country, accounting for approximately 87% of total meat <br /> <br /> <br /> <br /> consumption. Indonesia’s demand for poultry meat is expected to continue growing, primarily driven <br /> <br /> <br /> <br /> by the growing purchasing power of the country’s expanding middle class. The poultry meat sector is <br /> <br /> <br /> <br /> projected to grow 70 to 90% by 2020 if GDP increases by 6% per annum. Those fact shows Poultry <br /> <br /> <br /> <br /> Industry as an ideal target to invest. This paper aims to further investigate the impact of this current <br /> <br /> <br /> <br /> condition while also assessing whether the shares value of CPIN (PT. Charoen Pokphand Indonesia, <br /> <br /> <br /> <br /> Tbk.) is undervalued or overvalued than the market. The final project was conducted using two valuation <br /> <br /> <br /> <br /> models, which are absolute valuation model and relative valuation model as comparison with other <br /> <br /> <br /> <br /> companies. PT Charoen Pokphand Indonesia TBk. has increase of the revenue from 2015 to 2016. The <br /> <br /> <br /> <br /> company has expanded in 2015 to produce the broiler cultivation that can increase the revenue of the <br /> <br /> <br /> <br /> company with using two stage because of this expanding, so for five years forward the revenue can be <br /> <br /> <br /> <br /> increase by 5% of GDP, and about 4% of inflation. After five years, increasing of revenue is projected <br /> <br /> <br /> <br /> by 5% GDP. From the absolute valuation using FCFF, obtained CPIN stock price of IDR 3.879,36 with <br /> <br /> <br /> <br /> potential upside 27,82% of the market price of IDR 3035 on December 30, 2016 that means CPIN share <br /> <br /> <br /> <br /> are fairly valued by the market. From the relative valuation model generated PER of 25,15 and 47,87% <br /> <br /> <br /> <br /> of premium which indicates market toward CPIN stock is favored with its peer companies. When the <br /> <br /> <br /> <br /> multiple EV/EBITDA of 15,4x with 127,06 % of premium and IDR 3.524,5 with potential upside <br /> <br /> <br /> <br /> 16,11%. It means that market toward CPIN stock is good compared with peers. The objective of the <br /> <br /> <br /> <br /> final project is to compare the intrinsic value with market value. The calculation shows that two of three <br /> <br /> <br /> <br /> valuation method give positive signal to buy the stock.