DETERMINING THE INTRINSIC VALUE OF PT PLN BATUBARA, A CASE STUDY

• Main Author: Bima Ekhariedo, Angga
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/55477
• Institution: Institut Teknologi Bandung

PT PLN Batubara (Company/PLNBB) is a subsidiary of PT PLN (Persero), was officially formed due to PLN needs to get the security of coal supply and cost efficiency. The objectives and Benefits of establishing the Company are focus to coal product quality and standards, committed to improve efficiency and effectiveness in providing optimal coal price to PLN and willing to fulfil coal supply for PLN needs minimum 20% of total needs of PLN/IPP by acquiring coal reserves. Relating to those objectives, to fulfil coal for PLN/IPP needs, the Company conducting the procurement process of coal from trading and its owned mining production. This research is focused on business analysis and determining the intrinsic value of PLNBB. The research begins from macroeconomic condition, industrial analysis using Michael Porter’s Five Forces Model, analyse PLNBB’s internal condition by using SWOT, financial statement analysis and conducting valuation with discounted cash flow. Based on Michael Porter’s analysis, the coal mining industry is still attractive with threats of potential new entrants is relatively moderate, threats of substitute products is relatively moderate, bargaining power of suppliers is high, bargaining power of buyers is high, and rivalry among existing competitors is high. The identification of internal and external position which are combined into one suggestive model called The Internal-External (IE) Matrix. The result of Matrix IE indicate PLNBB’s position in cells II (Build and Grow), which means Company can implement recommendations Intensive or Integrative. Based on financial statement analysis by calculating the ratios, PLNBB is relatively able to manage its finances well which is almost similar as the industry average. In this final project, the intrinsic value of the firm will be calculated using Free Cash Flow to the Firm (FCFF) due to Company has both debt and equity on its balance sheet. Based on Free Cash Flow to the Firm, range of PLNBB’s intrinsic value is $ 129.967.636 until $ 150.777.724. The comparison with Book Value of Equity in 2019 Audited, it is IDR 1.595.109.000.000 (equal $ 114.690.035, exchange rate Rp 13.908 / 1 USD). It is considered undervalued since the intrinsic value is 1,13 times until 1,31 times than Book Value of equity in 2019. Company’s performance is still considered attractive to potential shareholders. This final project that calculate PLNBB’s valuation serves as the initial information for management.