VALUATION OF PT PERTAMINA (PERSERO) POST RESTRUCTURING

• Main Author: Milza, Rico
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/71830
• Institution: Institut Teknologi Bandung

Global decarbonization and energy transition agenda become a massive challenge for energy companies. Some international oil companies are spinning off their renewable energy business to maximize the potential valuation. Spin off phemomena to increase the shareholder value has been long implemented by various conglomerates around the world. Pertamina, the Indonesian integrated oil and gas company, adjusted its strategy to unlock the value of the company by restructuring and spin-off its business into six sub-holdings to achieve shareholder’s aspiration of US$ 100 billion valuation. This research aims to assess the valuation of Pertamina post restructuring using the Sum of The Part (SOTP) valuation method of each sub-holdings and subsidiaries. Internal and external analysis of each sub-holdings and subsidiaries used as the input of the valuation process. Intrinsic valuation method using FCFF and relative valuation method using EV/EBITDA and P/BV used to calculate the implied equity value of each sub-holdings and subsidiaries. The results of SOTP implied equity value based on each method averaged and then adjusted for the holding company’s debt and cash. This research also examines the scenario analysis of each sub-holdings and subsidiaries intrinsic valuation facing the future challenges and opportunities to get the probabilistic ranges of valuation. FCFF valuation results of each sub-holdings and subsidiaries post restructuring revealed the total implied equity value of USD 75,29 billion. The total relative valuation results of each sub-holdings and subsidiaries of Pertamina is USD 76,00 billion. Average total implied equity value of Pertamina using both methods is USD 75,65 billion. After net cash and debt adjustment of PT Pertamina (Persero) of USD -9,79 billion, the average total implied equity value for PT Pertamina (Persero) is USD 65,85 billion, much lower than shareholder’s aspirations of USD 100 billion. In the optimistic scenario, the total implied equity value of Pertamina can reach USD 101,1 billion. In the pessimistic scenario, the total implied equity value becomes USD 35,79 billion. Sensitivity analysis of valuation variable for each sub-holding and subsidiaries conclude that ICP is the most sensitive variable to PHE as the major contributor for Pertamina valuation. The rest majority of sub- holdings and subsidiaries’s most sensitive variable is cost of revenue.