STOCK VALUATION OF PAKUWON JATI TBK

• Main Author: Wijaya Hartono, Hendrick
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/71861
• Institution: Institut Teknologi Bandung

After Indonesia got hit by a pandemic in 2020, Indonesia’s economy managed to recover in 2021. However, the property industry in Indonesia was experiencing a negative impact due to increasing interest rates. The increasing interest rates means that people will face higher costs if they want to borrow money to buy property. Moreover, people became more hesitant to buy or invest in property because government-borne value added tax incentives (PPN DTP) ended in September 2022. However, PT Pakuwon Jati Tbk. (PWON) seems to be less impacted because PWON have recurring income and non-recurring income as their source of income. Recurring income originates from space rental, service apartment, hotel, etc. Nonrecurring income originates from sale of condominiums and offices and sale of land and buildings.The less restriction on people's mobility to do activities outside their house and the growth of GDP caused by household consumption indicates that PWON’s recurring income will be less impacted negatively by the increasing inflation rate. Considering that, it is time to revaluate the stock price of PWON if it is overvalued or undervalued. This study employs secondary data from PWON’s annual report from 2015 to 2021, PWON’s public expose, and news that were relevant to PWON and the property industry. This study uses absolute valuation (Discounted Cash Flow) and relative valuation (EV/EBITDA and PE Ratio) methods to get the intrinsic value of PWON. Several assumptions for the financial model were made by considering the external and internal analysis. External analysis consists of macroeconomic conditions, PESTEL analysis, and Porters Five Forces. Internal analysis consists of financial ratio analysis and corporate governance. In the financial ratio analysis, this study analysed liquidity ratios, activity ratios, solvency ratios, and profitability ratios. Financial ratio analysis was done by combining cross-sectional analysis and time-series analysis. In crosssectional analysis, this study compared the PWON’s ratio with other companies that had similar market capitalization with PWON. In the time-series analysis, this study analysed the trend of each ratio from 2018 to 2021. After that, those assumptions were used for projection of the PWON’s cash flow to the firm for five years. Finally, this study also did sensitivity analysis to test the financial model with the changes in assumptions. Several variables that were chosen are changes in the infinite growth rate, changes in weighted average cost of capital and cost of goods sold. The intrinsic value of PWON was derived by using a blended valuation method. The author gave weight on the various valuation models that were used. From the method, the intrinsic value of PWON was Rp 444 / share. The sensitivity analysis showed that PWON’s intrinsic value is more sensitive to the changes in WACC rather than changes in infinite growth rate and COGS as it can make a huge difference between the current price and the estimation of intrinsic value. As the margin of safety is negative, it is not favourable for the new investor that seeks the capital margin. The new investor may seek other companies to invest in where the companies will get an advantage by the increasing interest rate and the increasing inflation rate in Indonesia