ESG INTEGRATION INTO COMPANY VALUATION: CASE STUDY OF PT SURYA ENERGI INDOTAMA

• Main Author: Ahmad Daffa, Haidar
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/77185
• Institution: Institut Teknologi Bandung

The commitment of Indonesia to the Paris Agreement has driven the government to issue regulations supporting the development of renewable energy in the country. By leveraging Environmental, Social, and Governance (ESG) criteria, investors can align their values with their investments and effectively assess a company's risk management capabilities. Companies prioritizing ESG principles, especially those engaged in renewable energy production, can seize opportunities arising from this situation. PT Surya Energi Indotama (SEI), a company previously not involved in equity financing, aims to capitalize on these opportunities. To obtain the valuation of PT SEI, both absolute and relative valuation methods were employed. Absolute valuation used the discounted cash flow (DCF) method, while relative valuation employed the EV/EBITDA multiple and the P/E ratio. The results of PT SEI's valuation were 4,676,987,999,218 rupiah using DCF, 8,686,232,950,359 rupiah using EV/EBITDA, and 6,978,853,964,499 rupiah using P/E ratio. Recognizing the potential of ESG factors to enhance a company's value, the author applied the Value Driven Adjustment approach and utilized the SASB industry specific ESG standards as a source of ESG materiality that could influence the valuation results. By implementing ESG materiality in PT SEI's business, the valuation results increased by 32.53% using DCF to 6,198,219,020,274 rupiah, 34.64% using EV/EBITDA to 11,695,564,503,802 rupiah, and 36.37% using P/E ratio to 9,517,369,224,171 rupiah.