STRATEGIC VALUATION AND BENCHMARKING ANALYSIS OF PT. NUSANTARA TURBIN DAN PROPULSI
By Farid Aziz Saleh 19009094
Undergraduate Program School of Business and Management Institut Teknologi Bandung
ABSTRACT
Companies will have to adjust responsively to cope with relentless competition in today’s market. Some strategies and tactics needs to be reviewed so that it could be applied in any specific situation, one of which is corporate restructuring. Since market become so volatile these days, each company has to search for best strategies that fit in certain condition based on their company performance. This research chose PT. Nusantara Turbin and Propulsi as the object of research. PT. Nusantara Turbin dan Propulsi (PT. NTP) is an aero engine and industrial turbine Services Company that based in Bandung, Indonesia. It is a developing national company that aims to become market leader in its business sector. In PT. NTP case, the company has been discussing issues about corporate strategy especially in finance sector. The company targeted to gather more capital so that they will be able to use it in operational activities to increase their profitability. One of the possible options is to increase their capital and gain more financing is by initiating to put company stock into public. In this research, writer will take part on calculating company’s value as an initial step before the company decides to go public. Other thing that PT. Nusantara Turbin dan Propulsi needs to observe is to analyze their current financial performance. Analyzing surrounding environment will also be needed for company to learn about their competitors and trends in market. In that case, writer will also perform Benchmarking Analysis to enrich this research. Benchmarking Analysis will be helpful to support valuation analysis and also give recommendation to company about which aspect they need to improve. Additional research that will be conducted is sensitivity analysis. This analysis will give insight about which financial aspect that gives highest influence on producing net profit. Writer used Discounted Cash Flow method based on theories from Aswath Damodaran. In doing calculation writer categorized the free cash flow forecast into two scenarios which are conservative and optimistic. For the optimistic scenario the value of the firm is IDR 1,895,488,105,171. In other hand, for the conservative scenario the value of the firm is IDR 287,578,774,664. The company could use this valuation result as a based on determining fair price for their Initial Public Offering. For the benchmarking analysis, writer performs Intra Industry Analysis and Inter Industry Analysis. Both learning conclude that PT.NTP not yet perform maximally and still below their main competitor. For sensitivity analysis, the most influential financial factor for net profit is depreciation with -1.418621529 coefficient points.
Keywords: Valuation, Discounted Cash Flow, Benchmarking Analysis, Sensitivity Analysis, MRO Company i
ABSTRAKSI
Pada era saat ini, perusahaan harus dapat melakukan penyesuaian secara responsif untuk mengatasi persaingan yang ketat. Berbagai jenis taktik dan strategi perlu untuk ditinjau agar dapat diterapkan dengan baik, salah satunya adalah restrukturisasi perusahaan. Pada riset ini objek yang akan diteliti adalah PT. Nusantara Turbin dan Propulsi (PT. NTP). Perusahaan berlokasi di Bandung dan bergerak di bidang jasa perawatan mesin pesawat dan turbin industri. Dalam kasus PT. NTP, perusahaan tersebut sedang mendiskusikan isu
di bidang keuangan.
Perusahaan menargetkan untuk meningkatkan modal sehingga dapat digunakan untuk kegiatan operasional dan peningkatan profitabilitas. Salah satu opsi yang memungkinkan adalah melakukan Initial Public Offering (IPO). Dalam riset ini, penulis akan mengkalkulasi nilai perusahaan sebagai langkah awal sebelum perusahaan memutuskan untuk melempar saham ke pasar. Hal lain yang perlu diobservasi oleh PT. NTP adalah analisa mengenai performa finansial. Analisa mengenail lingkungan industri sekitar juga penting untuk dilakukan agar perusahaan dapat mengetahui tentang kompetitor dan tren yang ada di pasar. Penulis juga akan melakukan Benchmarking Analysis untuk memperkaya hasil studi. Benchmarking Analysis akan berguna untuk mendukung analisis valuasi dan memberikan rekomendasi untuk dapat meningkatkan performa perusahaan di masa depan. Analisa tambahan yang dilakukan adalah analisa sensitifitas yang bertujuan untuk mengetahui aspek finansial apakah yang paling sensitive terhadap pembentukan laba bersih. Penulis menggunakan metode Discounted Cash Flow berdasarkan teori Aswath Damodaran. Dalam melakukan kalkulasi terdapat dua skenario berdasarkan prakiraan free cash flow yaitu skenario konsevatif dan skenario optimistis. Untuk skenario optimistis didapat nilai perusahaan sebesar Rp 1.895.488.105.171,-. Sedangkan untuk skenario konservatif didapatkan nilai perusahaan sebesar Rp 287.578.774.664,-. Untuk Benchmarking Analysis, penulis melakukan perbandingan dengan kompetitor baik dari industri yang sama maupun berbeda. Kedua analisa menyimpulkan bahwa PT. NTP belum maksimal dalam performa finansial dan berada dibawah kompetitor lain. Untuk analisa sensitifitas didapatkan bahwa aspek yang paling mempengaruhi laba bersih adalah depresiasi dengan -1.418621529 poin. Keywords: Valuation, Discounted Cash Flow, Benchmarking Analysis, Sensitivity Analysis, MRO Company ii
VALIDATION PAGE
STRATEGIC VALUATION AND BENCHMARKING ANALYSIS OF PT. NUSANTARA TURBIN DAN PROPULSI
By: Farid Aziz Saleh 19009094
Undergraduate Program School of Business and Management Institut Teknologi Bandung
Supervisor
Anggoro Budi Nugroho, MBA NIP 198002212010121001 iii
FOREWORD
First of all, I would like to thank Allah SWT for his mercy and grace so that I am able to finish this final project as a requirement to complete my undergraduate program in SBM-ITB. This final project titled “Strategic Valuation and Benchmarking Analysis of PT. Nusantara Turbin dan Propulsi”. In this research, I’m applied some of the subject and knowledge that I’ve already learned during my study in this university. I would like to praise Allah SWT for giving me opportunity and blessing in every phase of my life which finally make me able to finish this research. Lots of obstacle and difficulty have bother along the way and because of that reason I want to thank many people for every help and support that I’ve got. Those peoples are: 1. Both of my parents; Indrawati and Erie Hermawan; for their role as a greatest mom and dad. Thanks for every single love and support on raising me since I was a child 2. My brother; Anggraito; and sister; Dhiyaa Felita, who will always be inseparable part of my life 3. My advisor, Mr. Anggoro Budi Nugroho; for all of the advise and patience on guiding me to finish this research 4. PT. Nusantara Turbin dan Propulsi, for giving me opportunity and data to support my research in the company 5. My mentor from PT. NTP; Mr. Wawan Suwandiwan; for all of the helpful information and hospitality on introducing me to other employee of the company 6. My housemates; Ryan, Andika, Januar, Addian, Arya, Adrian, Ail, Adi, Yoyo, Sapta and Andra; for building marvelous atmosphere and memories on a cushioned place called Kombang 7. Friends from SBM 2012; Om Opan, Vino, Adrian Pacul, Adam Ultra, Iksan Birin, Danur, Bandrek, Andra, Aldiansah, Boy Rekato, Mulham, Febrandy, Mamad Reza, Ansos, Roy Adam, Raedi Ciao, Bian, Omar Ote, Yudho, Jo Todo, Dito, Haga, Acay, Dikjen, Cipet, Eko, Jamur, Indra, Christian, Putu Bayu, Andre, Dimas, Wicak, Roffi, Bintang, Doddy, Aip, Herta, Nawanda, Zapran, Rikky, Daji, Audi, Rifan, Dipo, Abirafdi, Shogi, Kafin, Cicit, Ica, Bala, Ira, Nacita, Bonbon, iv
Puma, Vanya, Enji, Indri, Arnisya, Ika, Sally, Meidita, Arin, Beki and others; tons of thanks for all of the teamwork on academic learning and worthwhile life lesson from new experiences. 8. Other people that give direct and indirect help during my study in SBM ITB; my juniors and seniors in SBM, all of SBM lecturers and tutors, and all of SBM staffs. 9. And special thanks to Danar Adiwena and Boy Rekato who gives many advice and help to design my presentation slide and accompanied me during preparation for the final presentation Last of all, I really hope that this research could give benefit others. I realize that it is far away from perfect, so every constructive criticism and advice would totally be appreciated.
Bandung, 23 July 2012
Farid Aziz Saleh
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LIST OF CONTENTS
ABSTRACT ................................................................................................................................... i ABSTRAKSI................................................................................................................................. ii VALIDATION PAGE ................................................................................................................iii FOREWORD ............................................................................................................................... iv LIST OF CONTENTS ................................................................................................................ vi LIST OF TABLES .................................................................................................................... viii LIST OF FIGURES ..................................................................................................................... ix LIST OF EQUATIONS................................................................................................................x LIST OF APPENDINCIES........................................................................................................ xi CHAPTER I INTRODUCTION ................................................................................................1 1.1 Background ..........................................................................................................................1 1.2 Problem Identification ........................................................................................................3 1.3 Research Objectives .............................................................................................................4 1.4 Scope......................................................................................................................................4 1.5 Writing Structures……………………………………………………………………..….4 CHAPTER II THEORETICAL FOUNDATIONS ..................................................................7 2.1 Company Profile .................................................................................................................7 2.2 Valuation ..............................................................................................................................9 2.2.1 Net Present Value ..................................................................................................13 2.2.2 Internal Rate of Return ..........................................................................................14 2.2.3 Free Cash Flow .......................................................................................................15 2.2.4 Discounted Cash Flow Valuation ........................................................................16 2.2.5 Terminal Value .......................................................................................................18 2.2.6 Net Working Capital .............................................................................................18 2.2.7 Capital Expenditure ...............................................................................................19 2.3 Benchmarking………………………………………………………………..………….19 2.3.1 Profitability Ratio………………………………...…………………..…………..19 2.3.1.1 Gross Profit Margin…………………………………………...…….…20 2.3.1.2 Operating Profit Margin…………………………………….……...…20 2.3.1.3 Net Profit Margin……………………………………………..………..20 2.3.1.4 Earnings per Share…………………………………………..…………21 2.3.1.5 Return on Asset……………………………………………..………….21 vi
2.3.1.6 Return on Equity………………………………………….……...……21 2.4 Sensitivity Analysis: Linear Regression………………………………….…………. 21 CHAPTER III METHODOLOGY ...........................................................................................23 3.1 Research Design .................................................................................................................23 3.2 Problem Identification .......................................................................................................23 3.3 Data Collection ...................................................................................................................24 3.4 Data Analysis ......................................................................................................................25 3.5 Conclusion and Recommendation ..................................................................................26 CHAPTER IV DATA ANALYSIS ...........................................................................................27 4.1 Valuation Analysis .............................................................................................................27 4.1.1 Weight Average Cost of Capital ..........................................................................27 4.1.2 Compound Annual Growth Rate ........................................................................29 4.1.3 Net Working Capital .............................................................................................30 4.1.4 Capital Expenditure………………………………………………..………..…...31 4.1.5 Value of the Firm…..………………………………………………..……………32 4.1.6 Price of Share……………………………………………………….…………….33 4.2 Benchmarking Analysis ....................................................................................................35 4.2.1 Intra Industrial Analysis .......................................................................................35 4.2.1.1 Gross Profit Margin ................................................................................36 4.2.1.2 Operating Profit Margin ........................................................................37 4.2.1.3 Net Profit Margin ....................................................................................39 4.2.1.4 Return on Asset .......................................................................................40 4.2.1.5 Return on Equity…………………………………………..…………...41 4.2.2 Inter Industrial Analysis .......................................................................................43 4.3 Sensitivity Analysis ...........................................................................................................46 CHAPTER V CONCLUSION AND RECOMMENDATION ............................................49 5.1 Conclusion ..........................................................................................................................49 5.2 Recommendation ...............................................................................................................51 REFERENCES .............................................................................................................................55
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LIST OF TABLES
Tables 4.1 – WACC Data……………………………………………………………….….28 Tables 4.2 – Change in Net Working Capital (Conservative Scenario) ………….…..30 Tables 4.3 – Change in Net Working Capital (Optimistic Scenario)………….……….31 Tables 4.4 – Capital Expenditure (Conservative Scenario) …………………….………31 Tables 4.5 – Capital Expenditure (Optimistic Scenario) …………………...…………..31 Tables 4.6 – Free Cash Flow and Terminal Value (Conservative Scenario)…....…….32 Tables 4.7 – Free Cash Flow and Terminal Value (Optimistic Scenario)……..………33 Tables 4.8 – IPO Price Comparison………………………… ……………………………34 Tables 4.9 – PT. NTP and PT. GMF Ratio Comparison …………………………...…...36 Tables 4.10 – Inter Industries Benchmark Comparison…………………………..…….43 Tables 4.11 –Regression Statistics……….………………………………………….…….47 Tables 4.12 – Single Regression Analysis………………………………………….…….47
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LIST OF FIGURES
Figures 3.1 – Research Design………………………………………………………..…25 Figures 4.1 – Benchmark Mapping……………………………………………………..44 Figures 4.2 – Regression Equation Graphic……………………………………………48
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LIST OF EQUATIONS Equation 2.1 – Net Present Value…………………………………………………………13 Equation 2.2 – Internal Rate of Return…………………………………………………...14 Equation 2.3 – Free Cash Flow (1)………………………………………………………...15 Equation 2.4 – Cash Flow from Operation………………………………………………15 Equation 2.5 – Free Cash Flow (2)………………………………………………………...16 Equation 2.6 – Free Cash Flow……………………………………………………………16 Equation 2.7 – Net Capital Expenditure………………………………………………....16 Equation 2.8 – Tax Shield………………………………………………………………….16 Equation 2.9 – Free Cash Flow (3)………………………………………………………...16 Equation 2.10 – Value of the Firm………………………………………………………..17 Equation 2.11 – Cash Flow………………………………………………………………..17 Equation 2.12 – Expected Growth………………………………………………………...17 Equation 2.13 – Cost of Debt………………………………………………………………17 Equation 2.14 – Cost of Equity………………………………………………………….…17 Equation 2.15 – Weighted Average Cost of Capital………………………………….…17 Equation 2.16 – Terminal Value………………………………………………………..…18 Equation 2.17 – Gross Profit Margin…………………………………………………..…20 Equation 2.18 – Operating Profit Margin……………………………………………...…20 Equation 2.19 – Net Profit Margin……………………………………………………..…20 Equation 2.20 – Earnings per Share………………………………………………………21 Equation 2.21 – Return on Asset…………………………………………………….……21 Equation 2.22 – Return on Equity……………………………………………………...…21 Equation 2.23 – Linear Regression Equation…………………………………………….22
x
LIST OF APPENDICES APPENDIX A Pro Forma Income Statement Conservative Scenario……………..…58 APPENDIX B Pro Forma Balance Sheet Conservative Scenario………………….….59 APPENDIX C Pro Forma Income Statement Optimistic Scenario……………...……61 APPENDIX D Pro Forma Balance Sheet Optimistic Scenario………………..….……62 APPENDIX E Income Statement PT. NTP of 2006-2011…………………………....…64 APPENDIX F Balance Sheet PT. NTP of 2006-2011…………………………….…..….65
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