VALUATION AND FINANCIAL PERFORMANCE ANALYSIS OF PT.INDIKA ENERGY
According to a coal market update study by the International Energy Agency, the price of coal has been highly volatile during the previous five years. In Q3 2022 coal price soaring which is 2 times higher in mid-2022. The volatility in coal prices has influenced Indonesian coal companies, subs...
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| Format: | Theses |
| Language: | Indonesia |
| Online Access: | https://digilib.itb.ac.id/gdl/view/79729 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | According to a coal market update study by the International Energy Agency, the price of coal
has been highly volatile during the previous five years. In Q3 2022 coal price soaring which is
2 times higher in mid-2022. The volatility in coal prices has influenced Indonesian coal
companies, substantially impacting both income and stock values. Additionally, increasing
global commitment to tackling climate change is expected to result in the implementation of
stricter carbon emissions regulations by 2030. PT. Indika Energy is an energy company that
highly relies on coal prices, accounting for between 75% to 88% of its revenue. Indika has
stated four strategies, two of which are Efficiency and Synergy Optimization and Prudent
management. However, the result of profitability performance is not aligned with the company
strategy. This research proposes to evaluate the comprehensive financial performance, assess
the intrinsic value using the DCF-FCFF approach, and estimate the price-to-earnings (P/E)
ratio and Market to Book (M/B) ratio of PT. Indika Energy. This study will make use of a
number of different ratios, such as the Current Ratio, the Quick Ratio, the Return on Assets
(ROA), the Return on Equity (ROE), the Earnings per Share (EPS), the Inventory Turnover,
the Inventory Turnover (days), the Operating Profit Margin (OPM), the Debt to Equity Ratio
(DER), and the net debt to EBITDA ratio. In order to improve the accuracy of the results, this
study involves a comparison analysis with other companies which operate in the same industry,
including PT. Adro Energy (ADRO), PT. Bayan Resources (BYAN), PT. Indo Tambangraya
Megah (ITMG), and PT. Bukit Asam PTBA). The DCF-FCFF approach will be used to
determine the intrinsic value. The study revealed that the company demonstrates the worst
liquidity performance and is the least profitable among its peers. However, the company has
managed to maintain the greatest leverage ratio. According to the DCF valuation, the company
appears to be undervalued with an intrinsic value of IDR 3,247, while the market value is IDR
1,540. The company is calso onsidered to be undervalued based on its relative valuation
metrics, with a price-to-earnings ratio (PER) of 1.06 and a price-to-book value (PBV) of 0.45.
This is in comparison to the industry average PER of 5.15. Hence, it is advisable for the
company to minimize its reliance on subcontractors by optimising its cost structure. It is not
advisable for investors to purchase Indika Energy stock due to the company's significant
dependence on debt, which increases the risk associated with the stock. However, it is advisable
to closely observe the company's performance over the next two to five years. To further
improve the study, it is recommended to use more up-to-date data and advanced valuation
approaches. |
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