STOCK VALUATION AND BUSINESS PERFORMANCE OF PT. INDO TAMBANGRAYA MEGAH, TBK

• Main Author: Darian, Evan
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/54982
• Institution: Institut Teknologi Bandung

Mining sector is one of the interesting sectors in Indonesian stock market to invest in, since Indonesia’s coal industry is one of the largest in the world where Indonesia is a coal producer and a coal exporter. Based on BP Statistical Review World Energy, Indonesia is ranked at 2 nd place in the world with coal production of 15.05 exajoules. Covid-19 pandemic hits hard many countries, this pandemic set back the growth of many countries in the world. Due to this pandemic in 2020, stock market around the world has crashed, including JCI which is Indonesian stock market and March 2020 was the lowest point. Seeing this market crash, investors tend to switch into safe haven assets such as bank deposit and purchase gold. When actually, this would be a good time into enter the stock market. Central Bank of Indonesia (BI) projects the growth of Indonesian economy in 2021 will be in the range of 4.3% to 5.3%. With the projection of positive economic growth in 2021 by Central Bank of Indonesia, this could lead to more coal are being exported since it is needed for manufacturing process and this will benefits PT. Indo Tambangraya Megah Tbk. since the majority of its coal that has been produced are being exported to neighboring countries while the remaining coal are being sold to be used by domestic market. Based on this issues, ITMG intrinsic value would be recalculated with the factors that might affect the valuation in mind. External, internal, and business model analysis were carried out to know about the business from top to down. Linear regression modelling is used to know the effect of global coal price to ITMG’s revenue. Absolute valuation model such as DCF analysis was conducted to know the intrinsic value of ITMG stock price. Relative valuation model such as PER and EV/EBITDA were used to compare ITMG with its peers. Based on DCF analysis, the intrinsic value per share of ITMG is IDR 15,910 per share and it has margin of safety 34% to the current market price with close price at 26 April 2021. Current market price for ITMG is IDR 11,850 and since the intrinsic value is higher than the current market price then the stock is undervalued. For the PER, ITMG is the highest in 2020, and for the EV/EBITDA is the second lowest in 2020 compared to its peers. The recommendation for the investor would be to buy ITMG stocks.