OPTIMAL CAPITAL STRUCTURE & VALUATION OF PT PUPUK KALIMANTAN TIMUR BEFORE AN INITIAL PUBLIC OFFERING (IPO)

• Main Author: Maruly Pangaribuan, Ryco
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/62938
• Institution: Institut Teknologi Bandung

Companies that will plan many expansion plans require investment funds that are not small. During the company's operational activities that will do a lot of expansion also needs to be studied how the financial performance and capital structure before applying for a funding loan. Pupuk Kaltim in this case has announced it will have several major projects, including in Bontang and in West Papua. To support these projects Pupuk Kaltim also plans to make a stock offering to the public to raise funds. Funding is very important to support the Kaltim Fertilizer business in the future. Companies that conduct IPOs will increase the value of the company with an optimal capital structure. Pupuk Kaltim is one of the manufacturing companies located in Bontang, East Kalimantan. The company has a vision to become a company in the field of world-class fertilizer, chemical and agribusiness industries that grow and sustainably. Pupuk Kaltim is challenged to be independent and not rely on the parent company in getting funding. The company's assessment is needed so that the company gets funding from outside the environment of Pupuk Indonesia as a state-owned enterprise, so that investors can take the decision to invest in Pupuk Kaltim. The main purpose of this report is to find out the optimal capital structure and conduct the company's assessment of Pupuk Kaltim so that it is known intrinsic value per share before the IPO. The analytical methods used in this research are external environmental analysis (macroeconomic and industrial analysis) and internal environmental analysis (resources base and financial ratio analysis). The company's valuation uses the Discounted Cash Flow (DCF) approach method with NPV and Terminal Value analysis as a review of forecasting financial projections with several scenarios. The first scenario is base-case scenario, second best-case scenario and last worst-case scenario. After doing calculations and evaluations, it was obtained that the capital structure of Pupuk Kaltim over the past few years has not been in an optimal position even the actual position of the debt ratio of the last two years at 10-11%. While the optimal capital structure position should be in the range of debt ratio of 67-80% to be able to increase the value of the company. And the value per share of Pupuk Kaltim from several scenarios is between Rp. 636 to Rp. 5,410 with the base case value (most likely) is at a price of Rp. 1,858 per share. The firm's optimal capital structure can be determined in two ways, they are minimizing weighted average cost of capital (WACC) and maximizes stock price. While on valuation calculations, this research uses the Discounted Cash Flow method, so it is advisable for further research to add other methods such as market approach, net asset approach and others. So many investors will consider investing in Pupuk Kaltim. To sell the company's shares to the capital market, Pupuk Kaltim must be selective in appointing underwriters to ensure the IPO plan is running well and does not undersubscribe on the initial offer.