VALUATION OF SHARE USING DISCOUNTED CASH FLOW AND RELATIVE VALUATION IN PT. KIMIA FARMA TBK.

• Main Author: Izzaturohman, Alhan
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/56898
• Institution: Institut Teknologi Bandung

PT. Kimia Farma, Tbk (KAEF) is one of the largest and oldest pharmaceutical company in Indonesia which also include top 10 market shares in pharmaceutical industry. Currently, the companies joined the holding with PT. Indofarma, Tbk and PT. Biofarma (persero) in order to synergize innovation and facilitate coordination in this industry as State Ownership Companies (BUMN). The companies in the pharmaceutical industry could run the business as usual and got advantages during the pandemic of Covid-19. Because of the people needs more medicine needs and equipment such as vitamin, mask, and herbal. It shows by the revenue of companies in industry increased during 2020. During 2020, KAEF revenue has increased 6,44% compared to previous years. The share price of KAEF has fluctuated during 2020 until early 2021 along with the increasing number of volume transaction. The share price of KAEF and volume transaction reached the highest point of companies on January 2021 since there are market sentiment related with the vaccination program from government and influencers. The share price reached the highest point Rp6.975 on closing price in January 12, 2021 while the volume of transaction is 244 million transaction on December 08, 2020. Based on current phenomena, the researcher interested to analyzed the intrinsic value of KAEF. The research objective is to analyzed the intrinsic value of KAEF and compared it with the market price and industry price. Then, the author provides considerations to the investors based on the valuation results. This research methodology is using discounted cash flow (DCF) valuation of free cash flow to the firm (FCFF) and relative valuation using PER and EV/EBITDA. Based on DCF and relative valuation resulted, the share price of PT Kimia Farma Tbk is overvalued. The overvalued of current relative valuation of KAEF affected by the small amount of earning shared. The intrinsic value of PT Kimia Farma, Tbk is Rp1.499 while lower compared with the current market price on June 17, 2021 is Rp2.430.