INVESTMENT PROJECT ANALYSIS OF NEW PRODUCTION FACILITY (A CASE STUDY OF PT BFM)
PT BFM is one of the companies engaged in vaccine manufacturers. It has experienced a decline in <br /> <br /> <br /> <br /> sales revenue in 2016 by Rp 30.16 billion or by 1.29% from the previous year because of polio type 2 <br /> <br /> <br /> <...
Saved in:
| Main Author: | |
|---|---|
| Format: | Theses |
| Language: | Indonesia |
| Online Access: | https://digilib.itb.ac.id/gdl/view/26817 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | PT BFM is one of the companies engaged in vaccine manufacturers. It has experienced a decline in <br />
<br />
<br />
<br />
sales revenue in 2016 by Rp 30.16 billion or by 1.29% from the previous year because of polio type 2 <br />
<br />
<br />
<br />
eradication initiated by the World Health Organization (WHO). Since polio vaccine export sales <br />
<br />
<br />
<br />
contribute the most to the company's net sales revenue, PT BFM must anticipate the increasingly <br />
<br />
<br />
<br />
eroded market of polio vaccine due to the global eradication program. Measles vaccine is a vaccine <br />
<br />
<br />
<br />
whose demand is forecasted to be still high because many countries in the world obligate their <br />
<br />
<br />
<br />
societies to be immunized with measles-based vaccines. The high demand for measles vaccine is <br />
<br />
<br />
<br />
utilized as a new revenue generator for the company, replacing the old revenue generator whose <br />
<br />
<br />
<br />
demand has dropped i.e. polio vaccine. However, the opportunity to maximize the sales is hindered by <br />
<br />
<br />
<br />
the limited capacity of existing measles bulk production facility. PT BFM would like to increase its <br />
<br />
<br />
<br />
capacity by investing in a new measles bulk production facility which is planned to be built either in <br />
<br />
<br />
<br />
modular-, concrete-, or steel-based construction. Thus, the main purposes of this research are to <br />
<br />
<br />
<br />
conduct an investment project analysis in order to find out the financial feasibility for each <br />
<br />
<br />
<br />
construction option, to select which construction is financially most feasible, and to determine the <br />
<br />
<br />
<br />
variables that greatly affect the investment returns. <br />
<br />
<br />
<br />
In this study, Discounted Cash Flow (DCF) is used as a valuation method to estimate the attractiveness <br />
<br />
<br />
<br />
of investment opportunity. DCF method uses Free Cash Flow to The Firm (FCFF) projections and <br />
<br />
<br />
<br />
discounts them using a required discount rate, to arrive at present value estimates. Some decision <br />
<br />
<br />
<br />
parameters used are Payback Period (PBP), Net Present Value (NPV), and Internal Rate of Return <br />
<br />
<br />
<br />
(IRR). According to research explorations, all of the construction options are feasible to be executed, <br />
<br />
<br />
<br />
yet the most financially feasible option is concrete-based construction. It generates the NPV and IRR <br />
<br />
<br />
<br />
for Rp 258,107 million and 17.56%, respectively. While its payback period is 11.8 years. Sensitivity <br />
<br />
<br />
<br />
analysis reveals that the investment returns are highly sensitive to the changes in both sales price and <br />
<br />
<br />
<br />
Weighted Average Cost of Capital (WACC). |
|---|