STOCK VALUATION AND INTRINSIC VALUE ESTIMATION OF PT CLIPAN FINANCE INDONESIA, TBK

• Main Author: Yeremia Tumewu, Putranda
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/57182
• Institution: Institut Teknologi Bandung

In April 2021, Lo Keng Hong, one of the most successful individual investors in Indonesia and a role model for many value investors, bought 205,376,800 shares of a multi-financing company, PT Clipan Finance Indonesia, Tbk. (CFIN). The purchase of 204,491,000 shares (equivalent to 5.13% of total shares) was made on April 8, 2021 and additional purchase of 885,800 shares (equivalent to 0.02% total shares) was made on April 12, 2021. In total, Lo Keng Hong’s share ownerships at Clipan as of June 2021 is 205,376,800 shares or equivalent to 5.15% of total outstanding shares. The fact that Lo Keng Hong purchased significant amount of share of CFIN triggers the author to take a deep dive into CFIN’s business, valuation, and fundamentals. The objective of this research is to review the fundamental financial performance and intrinsic value of CFIN based on historical financial data from year 2016 until 2020. Two methods of valuation are utilized to estimate CFIN’s intrinsic value: absolute valuation and relative valuation. Discounted Cash Flow to the Firm (DCFF) model is used for absolute valuation, meanwhile Price to Book Value (PBV) and Price to Earning Ratio (P/E Ratio) methods are used for relative valuation. From topline perspective, the Company’s revenue is expected to increase by 7.5% YoY from IDR1.6 trillion in 2020 to IDR 1.7 trillion in 2021. The growth is expected to be contributed mainly from the increase sales of new cars following recovery of automobile industry as a result of 0% Luxury Goods Value Added Tax policy which has been recently extended to August 2021. From bottom-line perspective, the Company’s earning is expected to increase from IDR 47 billion to IDR 244 billion. The increase of sales and reduction on provision for financial asset impairment are expected to be the main drivers of the profit growth. By referring to absolute valuation, CFIN’s intrinsic value is estimated at IDR1,600/share. By referring to relative valuation using PBV and P/E methods, CFIN’s intrinsic value is calculated at IDR 1,258/share and 833/share respectively. These numbers are significantly higher than CFIN’s current price at IDR 300/share, thus providing relatively high margin of safety for investors. After conducting internal and external analysis including estimation of CFIN’s intrinsic value, the author provides buy recommendation for CFIN’s stock with target price at IDR 880/share.