STOCK VALUATION OF PT. CHANDRA ASRI PETROCHEMICAL, TBK: IMPACT OF OIL PRICE VOLATILITY

• Main Author: Vigar Parasdhika, Mohamad
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/68735
• Institution: Institut Teknologi Bandung

Indonesia, with a 270 million population and 4-5% GDP growth, holds an essential role as a petrochemical industry player in South-East Asia. Besides that, Indonesia has a vast potential demand along with the advantage of a demographic bonus and a growing middle class. With those advantages, Indonesia is expected to gain improved purchase power, potentially impacting the growth of olefin-based petrochemical demand, for instance, in customer goods packaging, construction, and automotive materials. As an essential player in the petrochemical industry, PT Chandra Asri Petrochemical (TPIA) is currently the seventh-highest producer of olefins with almost 2100 KTA and the fifth- highest polyolefins producer with 1200 KTA in Southeast Asia. The fluctuation of crude oil prices changes the financial performance of TPIA. From another point of view, it has become a possible opportunity to collect good fundamental stock with lower prices in particular crude oil market conditions—the research using the secondary data from the TPIA annual report on the period of 2017 to 2021. The data was processed using the absolute valuation method through Discounted Cash Flow and the Free Cash Flow to Equity projections. The fair value of TPIA at the end of 2021 was calculated as IDR 625 - 1361/share, resulting in an overvalued market price of IDR 2650/share. A further observation was also done that resulted in the crude oil price significantly impact to TPIA's net profit yet less impacting its fair value. In contrast, TPIA's fair value is more sensitive to gross profit, depreciation & amortization growth.