STOCK VALUATION OF PT INDUSTRI JAMU DAN FARMASI SIDO MUNCUL

• Main Author: Zuchrizal Rasyidian Winata, Mas
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/50796
• Institution: Institut Teknologi Bandung

Indonesia’s gross domestic product back in 2019 was at 5.02 percent. Combined with the growing consumption of low- and middle-class citizens, Indonesia’s was forecasted to grow at around 5.0 to 5.4 percent in 2020. However, due to the global pandemic of COVID-19, economic activities were put to halt; offices were closed, and people were advised to stay at home to prevent the disease from spreading. As a result, International Monetary Fund projects that Indonesia will only gain 0.5 percent of real GDP in 2020. Stock market were also in turmoil; Jakarta Stock Index declined to around 3,900 rupiah at the beginning of the lockdown. Almost no publicly-listed companies survive from this decline of value, including the seemingly sound company fundamentally PT Industri Jamu dan Farmasi Sido Muncul. The main objective of this research is to figure out the intrinsic value of PT Industri Jamu dan Farmasi Sido Muncul. To begin with, identifying factors from outside and inside the company is necessary to produce a robust framework for the valuation. External analysis using PESTEL suggests that even though herbal medicine industry will seemingly thrive, the general situation of external factors is fragile. Industry analysis also suggests that pharmaceutical industry is a competitive landscape, moreover in the situation of pandemic. However, internal analysis of PT Industri Jamu dan Farmasi Sido Muncul indicates that the company is currently in a great shape, with growing profit margins and no short-term debts. The company also seemed to secure competitive-advantage from one of its business sectors over its competitors. Absolute and relative valuation are used in this research to obtain the target price for PT Industri Jamu dan Farmasi Sido Muncul, along with other supporting methods. According to Discounted Cash Flow (DCF), the company is valued at 1,394 rupiah per share, while price- to-earnings relative or P/E ratio multiple values the company at 1,980 rupiah per share. Both valuation methods yield higher value than current PT Industri Jamu dan Farmasi Sido Muncul’s market price. Additionally, Monte Carlo Analysis suggests that in the future, the company will be more likely see an uptrend in its market value, and Piotroski F-Score also yields decent result for the assessment of the company. Based on these results, author recommended that it would be better to hold the stock of PT Industri Jamu dan Farmasi Sido Muncul, due to its current price that is already close to absolute valuation’s target price, and the uncertainty of global conditions. Nevertheless, author also concluded that the company is fundamentally robust and could see further improvements in the future.