VALUATION OF PT INDIKA ENERGY TBK (INDY) AFTER ENERGY TRANSITION STRATEGY

• Main Author: Yonathan Suryana, Michael
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/79843
• Institution: Institut Teknologi Bandung

Coal industry nowadays face the big issue about environmental. Coal is known as the dirty energy sources. Many non-profit organization with ESG concern initiated the movement to force government to apply energy transition movement. Nowadays, government realize to apply energy transition as soon as possible. This drives government to formulate the new regulation related to energy transition vision. In global, many governments apply the regulation to forces companies and industries to apply energy transition. It also happens in Indonesia. Indonesia’s government has commitment to comply the Net Zero Emissions (NZE) target. In order to achieve this target, Indonesia’s government formulate the newest regulation PP No. 112/2022. This regulation forces the early retirement of coalbased power plant. This regulation will decrease the coal demand in the future. Finally, this regulation forces coal companies in Indonesia to apply the energy transition movement. Many coal companies in Indonesia forced to change their business strategy. It is also happened in PT Indika Energy Tbk (INDY). PT Indika Energy Tbk apply some strategies to reduce this legal risk, such as by investing in non-coal industries, decarbonizing the operations, and divesting from high-carbon industries. One of the interesting corporate action conducted by INDY is the divestment strategies that applied for some last years. The newest divestment conducted by INDY is the divestment of PT Multi Tambangjaya Utama (MUTU). MUTU has contributed to around 6 until 8% total revenue of PT Indika Energy Tbk. Also, MUTU coal quality is considered as the high-grade coal with high caloric value. This corporate action catch many investor attention. In this research, PT Indika Energy Tbk valuation will be revalued and compared between before MUTU Divestment and after MUTU Divestment. Since PT Multi Tambangjaya Utama is not the public listed company, firstly, there is need to estimate the financial statements. The valuation used in this research is by using Free Cash Flow to Equity (FCFE) method. FCFE calculation will be used for PT Indika Energy Tbk before MUTU divestment and after MUTU divestment. Then, the value between before MUTU divestment and after MUTU divestment compared each other. Beside of that, in this research also cover financial ratio and relative valuation also compared to other coal companies in Indonesia.