COMPANY VALUATION USING DISCOUNTED CASH FLOW AND RELATIVE VALUATION CASE STUDY OF PT CENTRATAMA TELEKOMUNIKASI INDONESIA TBK IN 2019
PT Centratama Telekomunikasi Indonesia Tbk (CENT) is a telco infrastructure provider, headquartered in Jakarta. The majority shareholder of CENT is a Private Equity (PE) institution which has primary objective to focus on profitability growth in its portfolio. Over 50% of PE’s acquisitions are exite...
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| Format: | Theses |
| Language: | Indonesia |
| Online Access: | https://digilib.itb.ac.id/gdl/view/53451 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | PT Centratama Telekomunikasi Indonesia Tbk (CENT) is a telco infrastructure provider, headquartered in Jakarta. The majority shareholder of CENT is a Private Equity (PE) institution which has primary objective to focus on profitability growth in its portfolio. Over 50% of PE’s acquisitions are exited within three to five years. However, PE has held CENT in its portfolio for more than seven years. Lately, PE has conducted some initial processes to exit from the Company but has to date not been successful in finding the buyer, in regards of price agreement. Therefore, the objective of this research is to assess the intrinsic value of the Company by using the latest audit figure 2019 as a recommendation for a potential investor’s decision to buy or not to buy the Company’s share.
The analytical method used in this research is a case study analysis. The research begins with an analysis of macroeconomic condition, analysis of telco infrastructure industry by using Michael porter’s five forces model, analysis of the external and internal factors for the Company by using PESTEL and VRIO model, then for the valuation approach conducted in this research is the discounted cash flow method, while the relative valuation method is that of EV/EBITDA multiple. Data collection used in the research are primary data by interviewing the key management and secondary data which consists of public expose and annual report of the Company for 2019 year ended.
The result of the research shows that CENT’s intrinsic value and the market price per share are amounting to Rp131 and Rp73, respectively. For the relative valuation, the EV/EBITDA for the industry and for CENT are 10.9 times and 5.7 times, respectively. The research’s conclusion is that CENT is undervalued for both valuation methods and the recommendation is to buy the Company’s stock. |
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