“STOCK VALUATION ANALYSIS ON PT ADHI KARYA (PERSERO) TBK IN PREPARATION OF CAPITAL INJECTION FROM THE GOVERNMENT”

• Main Author: Nursyani, Tiara
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/67923
• Institution: Institut Teknologi Bandung

PT Adhi Karya (Persero) Tbk, later stated as “ADHI” or “Company” was established in 1960. On March 18, 2004, ADHI entered a new chapter in its journey after becoming the first construction company to list its shares on the Indonesian Stock Exchange with a composition of ownership by the Government of 51% and Public of 49%. To support the long-term goals and completing the infrastructure development and National Strategic Project (PSN) in particular, it is necessary to increase equity or increase funds through the issuance of new shares (rights issue) with the aim of increasing company leverage, business capacity and maintaining the sustainability of investment project funding. Furthermore, the implementation of the rights issue and maintaining the share ownership portion of the government remains or not diluted from its current position of 51% to below 50% (so that ADHI remains a state-owned company), then in the rights issue plan, the Government of the Republic of Indonesia must take proportionally through the Pre-emptive Rights/HMETD through Government Capital Injection. Based on the formulation of business issues, the purpose of this study is to determine the fair value of PT Adhi Karya (Persero) Tbk. share prices by using the free cash flow to firm and relative valuation that can be used as a benchmark in determining the fair value of PT Adhi Karya (Persero) Tbk. stock prices in preparation of capital injection from the government through rights issues. The Discounted Cash Flow (DCF) Method and relative valuation are used to do the valuation. The prediction of generated cash flow using DCF is relevant, considering the risk that could impact a company's business plan and stability. Meanwhile, from the relative valuation we can benchmark from other companies. The author’s valuation shows that ADHI’s intrinsic value according to DCF is Rp935 while Rp915-945 based on relative valuation. According to DCF and Relative Valuation, shows that the share price (as per 30 May 2022) Rp725 is undervalued. Hence, the author recommends buying this stock since its market value is lower than its intrinsic value at the time when this research is made. Author also concluded that ADHI possesses a solid fundamental as it continuously accounts for positive growth in its profitability and return supported by capital injection from the government through rights issues which author may recommend buying or holding this stock for the long-term investment industry.