STOCK VALUATION OF PT HANJAYA MANDALA SAMPOERNA TBK

• Main Author: Audy Valentine, Christy
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/56851
• Institution: Institut Teknologi Bandung

PT Hanjaya Mandala Sampoerna Tbk (HMSP) is a manufacturer and distributor of tobacco cigarette products. This company produces three types of cigarettes, namely Machine Made Kretek Cigarettes (SKM), Hand Rolled Kretek Cigarettes (SKT), and Machine-Made White Cigarettes (SPM) with SKM as its superior product. On average, from 2015 – 2020, PT Hanjaya Mandala Sampoerna Tbk is included in the tier 1 category. In 2020 through PMK No. 152 / PMK.010 / 2019 the Indonesian government officially raised cigarette excise rates for SKM and SPM products with an average increase of 23%. This regulation has a direct effect on PT Hanjaya Mandala Sampoerna Tbk because more than 70% of the company’s COGS comes from cigarette excise tax. the Covid-19 pandemic also affected the company's performance which caused the company’s cigarette sales to decline and resulted in a decline in company revenue by 14.7% in 2020. HMSP's share price also experienced a decline, which had touched its highest level with a price of IDR 5,200 per share on January, 26 2018, and went down to IDR 1,505 per share on December, 31 2020. This research aims to analyze the company's performance over the last 5 years and measure the intrinsic value of PT Hanjaya Mandala Sampoerna Tbk to help investors in making a decision on whether to buy, hold, or sell HMSP stock. This research uses an absolute valuation model using free cash flow to the firm (FCFF) with three scenarios: base-case scenario, best-case scenario, and worst-case scenario and three scenarios with risk adjusted discount rate (RADR), for relative valuation model using price to book value (PBV) and price to earnings ratio (PER). The valuation result using FCFF with base and worst-case scenario, and RADR with base and worst case scenario suggests that the intrinsic value of PT Hanjaya Mandala Sampoernsa Tbk is overvalued, therefore the recommendation for investors is to sell the stock, and relative valuation model using PBV and PER recommend to sell as well, while the valuation result using FCFF with best case scenario suggest the intrinsic value of HMSP is undervalued, thus if and when this scenario occurs the investors are recommended to buy, while for best case scenario with RADR the recommendation is to hold HMSP stock.