EXAMINATION STOCK UNDERPERFORMANCE OF PT GMF AEROASIA RELATIVE TO INDUSTRY STANDARD

• Main Author: Salim, Ryan
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/84035
• Institution: Institut Teknologi Bandung

PT. GMF AeroAsia as one of the most prominent Maintenance, Repair, and Overhaul (MRO) companies in Indonesia and Asia-Pacific region, has experienced a decline in its stock performance since its Initial Public Offering (IPO) on October 10th, 2017. The first offering at 364 rupiah experienced a performance that declined to 80 rupiah per share on December 29, 2023. This research will employ internal and external analysis aiming to unveil the reason underlying the declining company worth and recommend actionable insight that will enhance its stock performance and overall financial health. This research will combine both qualitative and quantitative approach. Review of GMF AeroAsia ten-year financial performance from 2014 to 2023 will give a clearer overview of the company’s performance and act as the foundation of determining the growth for projected income statement and balance sheet, while avoiding outlier performance during the COVID-19 pandemic. Financial ratios such as current ratio, quick ratio, return on assets (ROA), return on equity (ROE), operating profit margin, and net profit margin are analyzed to assess GMF financial stability, operational efficiency, and overall performance. Additionally, in determining the fair value of company’s stock, intrinsic valuation is employed including Discounted Cash Flows (DCF) model. Furthermore, industry benchmarks of Triumph Group, Inc., Allen Aircraft Radio Corp, and SIA Engineering Company through multiple market approach are conducted to gain not only insight of the best practices in the MRO industry or performance need to enhance, but also current financial performance relative to its industry peers. External factors possibly influencing GMF AeroAsia underperformance also evaluated through PESTEL framework which covers political, economic, social, technological, environmental, and legal aspects. Additionally, Porter’s five forces analysis is conducted to understand the competitive dynamics within MRO industry and extent of impact it has on GMF AeroAsia. Several findings on GMF AeroAsia reveals that the underperformance mainly attributed to the declining of profitability margin, inefficient asset utilization, high operational costs, and unfavorable external economic condition. The analysis of GMF's financial ratios in comparison to the industry average indicates that GMF's performance is significantly divergent from the norm, where there is urgent requirement to improve the liquidity management, cost control, and enhanced its operational efficiency. Intrinsic valuation suggests that GMF AeroAsia stock is ii undervalued by the market, while the current market price on 29 December 2023 is at 80 rupiah, the intrinsic valuation resulted 207.60 rupiah which is above the market price. Furthermore, the company's valuation ratios, such as P/E ratio, M/B ratio, and EV/EBITDA, when compared to industry averages through multiple market approach, are below the standard, further indicating that GMF AeroAsia's stock is undervalued by the market. This indicates that GMF AeroAsia still serve as an attractive investment prospect for investors with a long-term perspective. The provided analysis suggests several recommendations to improve the stock performance and overall financial stability of GMF AeroAsia. These recommendations include optimizing operational processes through the implementation of lean manufacturing principles, which would help reduce unnecessary costs. Additionally, the research proposes leveraging technological advancements to enhance service efficiency, as well as implementing robust financial management practices. Furthermore, strategic partnerships and market expansion are suggested to diversify revenue streams and enhance market presence. These recommendations not only enhancing company’s financial metric, but also enhance investor confidence and market valuation.