STOCK VALUATION AND PERFORMANCE OF PT UNITED TRACTORS TBK (UNTR) AMID THE CLEAN ENERGY CAMPAIGN AND THE COAL PHASE-OUT POLICY

• Main Author: Faisal Lathief, Muhammad
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/77579
• Institution: Institut Teknologi Bandung

The rising demand for coal in 2021 continues in 2022 and almost threatens the world's emissions (GHG) reduction target by 2050, initiated in the 2015 Paris Agreement. Through Presidential Regulation number 112/2022, the Government of Indonesia embodies Indonesia's commitment to exit coal energy by 2050 and campaigns for the energy transition to new and renewable energy. PT United Tractors Tbk (UNTR) is one of the major companies in Indonesia that has a significant dependence on the coal sector, which is 88% in 2021. Global and national policies related to the energy transition, especially the phase-out of coal energy, will pose challenges and business opportunities for UNTR. PT United Tractors Tbk has responded to these challenges by diversifying its business by acquiring nickel mineral mining companies: Stargate Pacific Resources and Stargate Mineral Asia in December 2022 and Nickel Industries Limited in June 2023. Even though the acquisition process is ongoing, Investors need to analyze whether UNTR's current share price is still suitable to be owned as an investment and trading instrument by considering the policy of eliminating coal use and the differentiation steps PT United Tractors Tbk took. The main purpose of this final project is to provide analysis and calculate the intrinsic value of PT United Tractors Tbk shares to help investors make investment decisions. This final project will also analyze UNTR's business performance over the last five years using several strategies and financial tools to support the valuation analysis. Fair value valuations use the absolute valuation model and relative valuation model. Based on financial data for the last five years, the discounted cash flow method carried out on future cash flow to the firm (FCFF) found that UNTR's intrinsic value was IDR 47,855 per share. Then with the same process, DCF is performed on FCFF, assuming revenue, capital expenditure, and changes from modified working capital. The assumption is: revenue from coal has decreased growth by 13.04% per year (CAGR 2022-2050, assuming a 98% decline from the coal sector by 2050), while revenue from non-coal projected using the average revenue from historical non coal revenue with additional potential revenue from nickel business. The result is an intrinsic value of 32,984 IDR. Then, the relative valuation model using P/E resulted undervalue and EV/EBITDA resulted in slightly overvalue. UNTR's share price as of July 21, 2023, is 24,500 IDR. The results of the financial ratio analysis show that PT United Tractors Tbk has a good financial condition. PT United Tractors Tbk has a good liquidity position and strong solvency. The simulation of the two scenarios shows that the current market price of PT United Tractors Tbk shares is still undervalued. UNTR's growth potential, overshadowed by the threat of policies to reduce the use of coal as an energy resource, is still excellent. UNTR's share price is still undervalued. With good financial strength and competitive advantage, PT United Tractors Tbk still has good growth opportunities. The advice for PT United Tractors Tbk is to continue to explore opportunities to invest in non-coal mining projects that are still close to the business PT United Tractors Tbk is currently engaged. PT United Tractors Tbk can still explore the potential fulfillment of capital using debt.