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Does The Stock of Indonesian Provider Tower Industry Have a Fair Value?

Author

Listed:
  • Saptono

    (Faculty of economics and business, Telkom University, Indones Author-2-Name: Farida Titik Kristanti Author-2-Workplace-Name: Faculty of economics and business, Telkom University, Indones Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)

Abstract

Objective - The objective of this study is to evaluate the stock intrinsic value of companies listed on the Indonesian Stock Exchange. The evaluation is carried out by using a DCF method of Free Cash Flow to Firm (FCFF) approach, and a relative method of Price to Earnings Ratio (PER) and Price to Book Value (PBV) approaches. Each approach uses three scenarios of optimism, moderation and pessimism. Methodology/Technique - The historical data of the companies between 2014 and 2017 was used to predict their performance in the period between 2018 and 2021. Findings - The results of this study indicate that by comparing the stock prices to their intrinsic value of the stock valuation of the DCF-FCFF, the stock market prices as of 1 January 2018 according to the optimistic scenario show that TBIG and SUPR were undervalued, while TOWR and IBST were overvalued. In the moderate scenario, TBIG and SUPR were undervalued, while TOWR and IBST were overvalued. Novelty - Meanwhile, TBIG, TOWR and IBST were overvalued and only SUPR was undervalued in the pessimistic scenario. Relative valuation using a PER approach in all scenarios indicates that TBIG, TOWR and IBST were overvalued and SUPR was undervalued. Finally, through a PBV approach, the relative valuation of TOWR, SUPR and IBST were overvalued and TBIG was undervalued in all scenarios.

Suggested Citation

  • Saptono, 2018. "Does The Stock of Indonesian Provider Tower Industry Have a Fair Value?," GATR Journals gjbssr520, Global Academy of Training and Research (GATR) Enterprise.
    • Handle: RePEc:gtr:gatrjs:gjbssr520
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    References listed on IDEAS

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    1. John Graham, 2001. "Estimating The Tax Benefits Of Debt," Journal of Applied Corporate Finance, Morgan Stanley, vol. 14(1), pages 42-54, March.
    2. Barth, Mary E. & Beaver, William H. & Landsman, Wayne R., 1998. "Relative valuation roles of equity book value and net income as a function of financial health," Journal of Accounting and Economics, Elsevier, vol. 25(1), pages 1-34, February.
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    More about this item

    Keywords

    Free Cash Flow to Firm; Relative Valuation; Tower Provider Industry; Intrinsic Value; Valuation.;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G19 - Financial Economics - - General Financial Markets - - - Other

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