chapter iv case description & analysisthesis.binus.ac.id/doc/bab4/bab 4_10.pdf · commissioner...

CHAPTER IV

CASE DESCRIPTION & ANALYSIS

4.1. Case description

PT Astra International, Tbk. is a conglomerate corporation which consists of 6

different sectors as of December 31st, 2010 that the valuation is complex, i.e. :

1. Automotive :

a. Automobile : Toyota, Daihatsu, Isuzu, Nissan Diesel, Peugeot, BMW

b. Motorcycle : Honda

c. Components : PT Astra Otoparts, Tbk.

d. Others : Astra World

2. Financial Services :

a. Automobile Financing : Astra Credit Companies, PT Toyota Astra

Financial Services

b. Motorcycle Financing : PT Federal International Finance

c. Heavy Equipment Financing : PT Komatsu Astra Finance, PT Surya

Artha Nusantara Finance

d. General Insurance : PT Asuransi Astra Buana

e. Banking : PT Permata Bank, Tbk.

3. Heavy Equipment and Mining

a. Construction Machinery : PT United Tractors, Tbk., PT Traktor

Nusantara

b. Mining Contractor : PT Pamapersada Nusantara

c. Mining : Dasa Eka Jasatama, PT Tuah Turangga Agung

4. Agribusiness : PT Astra Agro Lestari, Tbk.

5. Information Technology

a. Document Solution : Astra Graphia Document Solution (AGDS)

b. IT Solution : Astra Graphia Information Technology (AGIT)

6. Infrastructure, Logistics and Others

a. Logistic Value Chain : PT Serasi Autoraya

b. General Infrastructure : PT Astratel Nusantara, PT Intertel Nusaperdana

Each sectors contributes different portion of Net Revenue, of which sectors

will be discussed in advanced.

Table 4.1 – Net Revenue as of December 31st, 2010

No. Sector Amount (in bio Rp)

%

1 Automotive 70,217 54.02%2 Financial services 9,967 7.67%3 Heavy equipment & mining 37,323 28.71%4 Agribusiness 8,844 6.80%5 Infrastructure & logistic 3,959 3.05%6 Information technology 1,565 1.20%7 Elimination (1,884) -1.45%

129,991 100.00%Total Source : www.astra.co.id

Before discussing the valuation, it is needed to know the company

management who managed the company as of December 31st, 2010

(www.astra.co.id) :

a. Prijono Sugiarto – President Director

Indonesian citizen, he has been President Director of PT Astra International, Tbk.

since 1 March 2010. He is fully responsible for all areas of Group business. He

was previously Director of the Company from May 2001 to February 2010. He

joined Astra in 1990 and currently serves as President Commissioner of PT

United Tractors Tbk, PT Astra Agro Lestari Tbk and PT Astra Honda Motor as

well as Vice President Commissioner of PT Federal International Finance, PT

Toyota-Astra Motor and PT Astra Daihatsu Motor. Prior to joining the Company,

he was the Sales Engineering Manager at Daimler-Benz Indonesia. He holds a

Dipl.-Ing. In Mechanical Engineering from the University of A. Sc. Konstanz,

Germany in 1984 and the degree Dipl.- Wirtschaftsing in Business Administration

from the University of A. Sc. Bochum, Germany in 1986.

b. Gunawan Geniusahardja – Director

Indonesian citizen, he was appointed Director of the Company in May 2001 and

is responsible for the Financial Services businesses. He started his career at the

Company in 1981 and currently also holds the position of President

Commissioner of PT Federal International Finance, and Vice President

Commissioner of PT Asuransi Astra Buana and Vice President Commissioner of

PT Bank Permata Tbk and Commissioner of PT Astra Agro Lestari Tbk. He was

appointed President Director of PT Federal International Finance (1997-2006) and

had served as Chief Executive of PT Astra International, Tbk. - Sales Operations

(1990-1997). He graduated from the Christian University of Indonesia, Jakarta in

1981.

c. Johnny Darmawan D. – Director

Indonesian citizen, he was appointed Director of the Company in May 2005 and

is responsible for the Automotive business (Toyota). He has also been the

President Director of PT Toyota-Astra Motor since 2002. He started his career at

Astra in 1982 as Accounting Manager of PT Multi Astra and was appointed

Director of Finance and IT PT Toyota-Astra Motor from 1992 until 2000. From

1996 to 2000 he served as Director of HRD & GA and in 2000 as Chief Executive

Officer of Toyota Sales Operation. Prior to joining the Company, he worked as an

auditor at Price Waterhouse. He graduated from the University of Trisakti

Accounting Department.

d. Djoko Pranoto – Director

A citizen of Indonesia, Djoko Pranoto has served as Director of the Company

since May 2008. Djoko also served as President Director of PT United Tractors

Tbk (UT) since May 2007 after serving as Vice President Director from 2001. He

also serves as the Director of UT Heavy Industry (S) Pte. Ltd. since 1995,

Commissioner of PT Pamapersada Nusantara since 2007 and Commissioner of

PT United Tractors Semen Gresik since 1999. At UT, he became General

Manager of Marketing (1991-1996) and so served as Director (1997-2000). Djoko

Pranoto completed his studies at the Faculty of Mechanical Engineering at the

University of Trisakti, Jakarta.

e. Widya Wiryawan – Director

Indonesian citizen, he was appointed Director of the Company in May 2008.

Currently, he is serving as President Director of PT Astra Agro Lestari Tbk since

May 2007 and earlier as Executive Vice President Director from 2006. He joined

Astra in 1994 and served as Finance Director of PT Federal International Finance

(1997-2000). He later served as Director of Finance of PT Astra Otoparts Tbk

(2000-2005) before being appointed as Vice President Director in 2006 in the

same company. Widya Wiryawan finished his studies at the Bogor Agricultural

University and holds a Master of Business Administration from the University of

Sydney, Australia.

f. Angky Tisnadisastra – Director

Indonesian citizen, he was appointed Director of the Company in May 2008.

From 2005 until May 2010 he served as President Director of PT Astratel

Nusantara, after previous serving as Director and Vice President Director (1993-

2005). He also served as President Director of PT Intertel Nusaperdana from

2005, and previously as Director and Vice President Director. In addition, he also

serves as a Commissioner of PT Marga Mandalasakti (since 2005), President

Commissioner of PT Surya Artha Nusantara Finance (since April 2010) and PT

PAM Jaya Lyonnaise (since 2006). At PT Asuransi Astra Buana, he served as

Commissioner from 2000 to 2008 and is currently appointed as President

Commissioner, while in PT Sedaya Multi Investama he is President Director since

2000. Angky Tisnadisastra completed his studies at the Faculty of Economics,

University of Indonesia.

g. Sudirman M. Rusdi – Director

Indonesian citizen, he was appointed Director of the Company in March 2010. He

also served as President Director of PT Astra Daihatsu Motor since January 2011,

after serving as Vice President Director and Director of the Technical,

Engineering & Manufacturing. He started his career at PT Astra Daihatsu Motor

in 1978. He is Commissioner of PT Astra Mitra Ventura and Chairman of

Gaikindo period 2010-2013. He is also active as a board member of Yayasan

Dharma Bakti Astra and Astra Bina Science Foundation.

h. Simon Collier Dixon – Director

An Australian citizen, he was appointed as a Director of the Company in May

2010 and is responsible for Corporate Finance, Information Technology and Risk

Management. Prior to joining the Company he worked for Jardine Matheson in

Hong Kong where he held the position of Group Treasurer, having joined Jardine

Matheson in 2006 from PricewaterhouseCoopers, where he was a Partner. Mr

Dixon holds a Bachelor of Economics (Accounting) from Flinders University,

Australia and is an Associate Member of the Institute of Chartered Accountants in

Australia and a Fellow of the Hong Kong Institute of Certified Public

Accountants.

The company management indicated that the management were capable and

had a lot of experiences to manage the company which added the company value.

4.2. Case Analysis

Case Analysis will be discussed in some steps, i.e. macroeconomy analysis,

microeconomy analysis and valuation for each subsidiary, combining the valuations

and comparing the combined value to the stock price.

4.2.1 Macroeconomy Analysis

Macroeconomy was projected stable which indicated by inflation rate,

exchange rate and GDP growth.

Table 4.2 – Inflation Rate, Exchange Rate, GDP Growth

Description 2010 2011 2012 2013 2014 2015 2016 Basis

Inflation Rate (Domestic)

5.13% 7.15% 5.85% 5.30% 4.20% 3.51% 3.02%International Monetary Fund, World Economic Outlook Database, April 2011

Exchange Rate IDR/USD

8,991 9,000 9,000 9,000 9,000 9,000 9,000

2010 : BI middle rate, the rest based on estimation (stable condition according to inflation and GDP growth)

GDP Growth (Domestic)

6.11% 6.20% 6.50% 6.70% 7.00% 7.00% 7.00%International Monetary Fund, World Economic Outlook Database, April 2011

Source : International Monetary Fund, Bank Indonesia

In addition, the projection of Indonesia GDP growth was suppported by

Pricewaterhouse Coopers.

Table 4.3 - Projected Real Growth in GDP and income percapita : 2005-50 (%pa)

Source : PricewaterhouseCoopers, The World in 2050, March 2006

4.2.2. Microeconomy Analysis and Valuation

Microeconomy analysis and Valuation will be pursued by each sectors. The

following is average three years (2008-2010) of Net Revenue which were consistent

to describe each contribution. (see Table 4.4 – Comparison of Net Revenue

Proportion by Sectors)

a. Automotive : 53.35%

b. Financial services : 8.67%

c. Heavy equipment & mining : 28.26%

d. Agribusiness : 7.86%

e. Infrastructure & logistic : 1.58%

f. Information technology : 1.16%

4.2.2.1 Automotive Sector

4.2.2.1.1 Company Background

Automotive sector provided many brands, i.e. : Honda for motorcycles;

Toyota, Daihatsu, Isuzu, Nissan Diesel (UD Trucks), BMW and Peugeot for

automobiles and trucks. In addition, Astra Otoparts has partnerships with global

players, i.e. : Aisin Seiki, Aisin Takaoka, Akebono, Daido Steel, Denso, DIC

Corporation, GS Yuasa, Kayaba, Keihin, Mahle, Nippon Gasket, Nittan Valve and

Toyoda Gosei.

Table 4.5 – Automotive Ownership

Source : Annual Report 2010

4.2.2.1.2 Company Management

The company management as of December 31st, 2010 (www.astra.co.id) was :

a. Johnny Darmawan D. – Director in Charge for Astra Motor II (Toyota) and Astra

Motor IV (Astra Component)

b. Sudirman M. Rusdi – Director in Charge for Astra Motor III Manufacturing (Non

Toyota)

c. T. Johannes Loman – Executive in Charge for Astra Motor I (Honda)

An Indonesian citizen, he was appointed as a Director of the Company in May

2011. He has also been Executive Vice President Director PT Astra Honda Motor

since 2009. He currently serves as President Commissioner of PT Suryaraya

Ruberrindo Industries and Commissioner of PT Showa Indonesia Manufacturing,

PT Musashi Autoparts Indonesia, PT Federal International Finance. He joined

Astra in 1997 as Marketing Division Head – Honda Sales Operation. From 1990

to 2000, he served as Chief Executive of Daihatsu Sales Operation from 2001 to

2007. He was a Marketing Director of PT Astra Daihatsu Motor from 2006 to

2007. He graduated from Parahyangan Catholic University, Bachelor of

Economics Business.



4.2.2.1.3 Industry Analysis

a. Global Market Outlook

The automotive depends heavily on customer purchasing power of which was

relatively increasing (as indicated by PricewaterhouseCoopers for 17 countries).

b. Domestic Market Outlook

The automotive depends heavily customer purchasing power of which was

relatively increasing. In addition, it depends on interest rate and exchange rate of

which were relatively stable (based on the projections of inflation rate and GDP

growth).

Based on global and domestic market outlook, there is a prospective growth

for Automotive sector which has a positive impact for the value.

4.2.2.1.4 Business Analysis

Astra had the largest sales and distribution network in Indonesia which will

support the industry prospective growth, as the following figures.

Figure 4.1 – Wholesale Motorcycle Market Share


Figure 4.2 – Wholesale Car Market Share


4.2.2.1.5 Challenges

Infrastructure limitation because of additional vehicles each year. It has to be

considered carefully because it can limit the prospective growth for the value.

4.2.2.1.6 Risk

a. Social risk : anticipated by corporate social responsibility programs

b. Environmental risk : anticipated by corporate social responsibility programs

It has to be considered carefully because it can limit the prospective growth

for the value.

4.2.2.1.7 Government Regulation

Uncertainty of Government regulation, i.e. :

a. Increasing tax on car registration fees

b. Progressive vehicle ownership tax

c. Removal of gasoline subsidy

The uncertainties will make the company value fluctuate based on the newest

government regulation.

4.2.2.1.8 Competitors

The competitors were based on the same industry, similar company structure

and PER (see the Table 4.6 - Comparison of Automotive Industry), i.e. : PT

Indomobil Sukses Internasional Tbk : an Indonesia-based manufacturing company.

The Company and its subsidiaries are engaged in assembling and distribution of

automobiles, buses and trucks, which include Suzuki, Nissan, Volvo, Volkswagen

(VW), SsangYong, AUDI, Hino, Renault, Manitou, Kalmar, Chery, Foton and Great

Wall brand names. The Company also assembles and distributes Mack motorcycles

and its related components, provides automotive maintenance services, heavy

equipments, financing activities, consumer financing, rental and trading of used

cards, and participating in the equity ownership of other companies engaged in the

automotive industry. (www.reuters.com)

Comparing to competitors, PT Astra International, Tbk. – automotive sector

was still dominating the market with the largest market share. Based on the dominant

position, it should can hold the same market share for the next years.

4.2.2.1.9 Projections

Because of limited data available for Discounted Cash Flow Method, the

projection will use Relative Valuation (Price-Earnings multiple (PER)). In addition,

the chosen comparable companies based on the same industry, similar company

structure and PER i.e. the competitors.

Public Companies Market Capital (in mio Rp.) PER

Indomobil Sukses International, Tbk. 10,508,056 17.03 x PT Astra International, Tbk. 220,837,765 15.37 x

Mean 16.20 x Median 16.20 x

25th Percentile 16.20 x High 17.03 x Low 15.37 x

PT Astra International, Tbk. - AutoSelected Multiples 15.37 x Parameter Value - Equity Income (in mio Rp. rounded) 4,298,000.00

Enterprise Value (in mio Rp.) 66,062,524.65Less: Interest Bearing Debt (in mio Rp.) 0.00

Indicated Equity Value (in mio Rp.) 66,062,524.65Add: Control Premium of (in mio Rp.) 0.00

Fair Value - based on % ownership (in mio Rp.) 66,062,524.65

Selected multiple used is the low one because PER of PT Astra International, Tbk.

compared to the competitor is lower.

Based on Relative Valuation, the intrinsic value of Automotive sector as of

December 31st, 2010 was Rp. 66.1 trillion.

4.2.2.2 Financial Services Sector


Financial services sector consisted of :

a. Automobile Financing :

• Astra Credit Companies

It finances all brands

• PT Toyota Astra Financial Services

It is a joint venture between PT Astra International, Tbk. and Toyota Financial

Services Corporation (50:50). It finances Toyota brand.


It finances Honda brand.

c. Heavy Equipment Financing :

• PT Komatsu Astra Finance

PT Astra International, Tbk. has 60%, Marubeni Corporation has the rest. It

finances heavy equipment for corporate and retail customers in many sectors.

• PT Surya Artha Nusantara Finance

It is a joint venture between PT Astra International, Tbk. through PT Sedaya

Multi Investama and PT Komatsu Indonesia (50:50). It finances Komatsu

heavy equipment for industrial companies mostly in mining.


It is best known for automobile insurance product.


It is a joint venture between PT Astra International, Tbk. and Standard Chartered

Bank (44.5 : 44.5).


The company management as of December 31st, 2010 (www.astra.co.id), i.e. :

a. Gunawan Geniusahardja – Director in Charge for Finance Companies and

Banking

b. Angky Tisnadisastra – Director in Charge for Insurance Company




The financial services sector depends heavily on interest rate and exchange

rate (for non IDR financing) of which was relatively stable (interest rate based on the

projections of exchange rate and GDP growth).

Based on industry, there is a prospective growth for Financial services sector

which has a positive impact for the value.


Financial services sector consisted of many types of financing and distribution

network in Indonesia which will support the industry prospective growth, i.e. :

a. Automobile Financing :

• Astra Credit Companies

It has 58 branches and point of services ini 46 cities across Indonesia.

• PT Toyota Astra Financial Services

It has 13 branch offices and 4 sub branches.


It has 121 branches and 357 Point of Service .

c. Heavy Equipment Financing :

• PT Komatsu Astra Finance

• PT Surya Artha Nusantara Finance


It has 26 branches and 12 service points.


It has 48 branches (including 10 sharia branches), 220 sub branches, 236 sharia

channeling offices, 7 cash offices, 1 payment point and 628 ATMs with Non

Performing Loan 0.7%.


Non Performing Loan : The financial services has to decrease non performing

loan as lowest as possible. It has to be considered carefully because it can limit the

prospective growth for the value, which the business is all about cash (financing

related).

4.2.2.2.6 Risk

a. Default Risk : anticipated by strong credit analysis (focus on quality)

b. Liquidity Risk : anticipated by issuing Medium Term Notes and right issue


for the value.


Uncertainty of government regulation change, that will make the company

value fluctuate based on the newest government regulation.


The competitors based on the same industry, similar company structure and

PER (see the Table 4.7 - Comparison of Financing Industry), i.e. :

a. PT Adira Dinamika Multi Finance Tbk

An Indonesia-based consumer finance company. The Company's principal

activities include leasing, factoring, consumer financing and credit card service.

Its major shareholder is PT Bank Danamon Indonesia Tbk. As of December 31,

2009, the Company was supported by 319 business networks that consisted of

branch offices, representative offices and points of service located throughout

Indonesia. (www.reuters.com)

b. PT Buana Finance Tbk

An Indonesia-based financing company. The Company is engaged in leasing,

consumer financing and factoring. It provides consumer financing and financial

leasing for automotive, heavy equipment, machineries, telecommunication and

vessels. As of December 31, 2009, the Company has 21 branches, located in

Jakarta, Surabaya, Semarang, Medan, Pekanbaru, Jambi, Palembang, Lampung,

Makassar, Balikpapan, Banjarmasin, Manado, Samarinda, Denpasar, Serpong,

Bekasi, Pontianak and Palangkaraya. (www.reuters.com)

Comparing to competitors, PT Astra International, Tbk. – Financial services

sector dominated the market because it mostly financed Automotive and Heavy

Equipment & Mining sectors (the sectors consecutively were dominated by PT Astra

International, Tbk. – Automotive sector and PT United Tractors, Tbk.).



projection will use Relative Valuation (Price-to-Book Value ratio). In addition, the

chosen comparable companies based on the same industry, similar company structure

and PER i.e. the competitors.

Market Capital(in mio Rp.)

Adira Dinamika Multi Finance Tbk 12,000,000 8.17 x 3.16 x Buana Finance Tbk 588,810 9.76 x 0.63 x



PT Astra International, Tbk 220,837,765 15.37 x 4.48 x PT Astra International, Tbk - Finser

Selected Multiples 3.16 x Parameter Value - % of Book Value (in mio Rp. rounded) 8,919,000.00

Enterprise Value (in mio Rp.) 28,204,162.64Less: Interest Bearing Debt (in mio Rp.) 0.00

Indicated Equity Value (in mio Rp.) 28,204,162.64Add: Control Premium of (in mio Rp.) 0.00

Fair Value - based on % ownership (in mio Rp.) 28,204,162.64

PBVPublic Companies PER

Selected multiple used is the high one because PER of PT Astra International, Tbk.

compared to the competitors is the highest.

Parameter value will use percentage of Equity Book Value 2010 as the

following table (in bio Rp.)

Table 4.8 – Percentage of Equity Book Value 2010

Amount % Amount % Amount %1 Automotive 17,944 15.90% 8,738 13.75% 9,206 18.67%2 Financial services 36,303 32.17% 27,384 43.09% 8,919 18.09%3 Heavy equipment & mining 29,569 26.20% 13,537 21.30% 16,032 32.51%4 Agribusiness 8,792 7.79% 1,336 2.10% 7,456 15.12%5 Infrastructure & logistic 6,023 5.34% 4,461 7.02% 1,562 3.17%6 Information technology 982 0.87% 521 0.82% 461 0.93%7 Elimination (1,809) -1.60% (1,809) -2.85% - 0.00%

8Investment in associates & jointly controlled entities 15,053 13.34% 15,053 30.53%

9 Minority interest 9,379 14.76% (9,379) -19.02%112,857 100.00% 63,547 100.00% 49,310 100.00%

No. Sector

Total

Assets Liabilities & Other Equity


Based on Relative Valuation, the intrinsic value of Financial services sector as

of December 31st, 2010 was Rp. 28.2 trillion.

4.2.2.3 Heavy Equipment and Mining Sector


United Tractors was established in October 13th, 1972 and listed (PT Astra

International, Tbk. as the major shareholder), with three fields of business, i.e. :

a. Construction machinery : as the sole distributor of Komatsu, Nissan Diesel,

Scania, Bomag, Valmet and Tadano

b. Mining contracting : providing mining services from mine design,

exploration, extracting,hauling, barging and loading

c. Mining : as a coal mine operator

In running the business, the company consisted of many subsidiaries and

affiliated companies, i.e. :

Figure 4.3 – Organization Structure

Source : www.unitedtractors.com

Table 4.9 – Organization Structure


4.2.2.3.2 Company Milestone

The milestone company (www.unitedtractors.com) was :

1972

PT United Tractors (UT) was established on October 13th, 1972.

1973

UT was appointed as the authorized sole distributor of Komatsu heavy

equipment, Sumitomo Link Belt and Tadano Crane.

1974

UT became the sole distributor of Bomag vibratory roller and Komatsu

forklift.

1982

PT Komatsu Indonesia (KI) was established as the manufacturer and

assembler of Komatsu Heavy Equipment and foundry component, located on

PPI UT - Cakung. Utilizing Komatsu Ltd. Japan technology, KI produces

buldozer, hydraulic excavator, motor grader, wheel loader and other heavy

equipment components for export to Japan. KI's Construction Equipment

Division (Compo Production Shop), Foundry Division & Frame Fabrication

Plant and Assembling Plant are now located at Jalan Raya Cakung, Cilincing.

1983

PT United Tractors Pandu Engineering (UTE) was established as the

manufacturer of forklift trucks, transportation equipment and attachments.

UTE produces under licensed products such as Komatsu forklift, John Deere

farm tractors, Niigata asphalt mixing plant as well as its own designed

products, such as Patria forklift and many attachments. Located in UT

Industrial Development Center, Cakung, UTE has expanded into several

fabrication plants in several locations.

1984

PT Pandu Dayatama Patria (PDP) was established as the manufacturer and

assembler of engines and hydraulic component, located in PPI UT-Cakung.

PDP produces equipments such as Komatsu and Nissan diesel engine, Patria

generating set and car engine for Peugeot, BMW and also hydraulic

manufacture.

1989

UT went public as PT United Tractors Tbk and listed its shares at the Jakarta

and Surabaya Stock Exchange on 17 September 1989. With 1,545,600,000

listed shares, UT's current shareholders are composed of 50.05% public and

49.95% PT Astra International, Tbk. At the same year, PT Pamapersada

Nusantara (Pama) was established as the surface mining contractor.

1990

UT acquired 60% shares of PT Berau Coal (Berau), which operates a coal

mine concession at Berau, East of Kalimantan. The fields are located at Lati

and Binungan.

1991

UT raised Rp. 115 billion through limited offering of 11,500,000 shares at the

offer price of Rp. 10.000, which at the same time increased number of shares

from 23,000,000 to 34,500,000.

1992

PT United Tractors Semen Gresik (UTSG) was established and located in

Gresik, East of Java. This company is a joined venture between UT and PT

Semen Gresik.

1993

Sunray Pte.Ltd. was established in Singapore to manage export and import

services.

1994 Bonus share of 3 to 1, increased the total number of shares to 138,000,000.

1995

KI went public and listed on the Jakarta and Surabaya Stock Exchange. At the

same year, UT Heavy Industry Pte. Ltd. was established in Singapore as

distributor of heavy equipment and Patria forklift - designed and produced by

UTE -- was certified with ISO 9002.

1996

Patria -- UTE's brand -- received Certificate of Confirmity (CE) in Europe and

Certificate of Safety (GS) in Germany. At the same year, United Ostermeyer

Engineering Pte. Ltd. was established in Darwin, Australia as a patent

company.

1997

Komatsu Remanufacturing Asia (KRA) was established in Balikpapan, 51%

owned by UT and 49% owned by Komatsu Asia Pacific Pte.Ltd., Singapore.

KRA engaged in overhauling and reconditioning heavy equipments of

Komatsu. At the same year, Pama Indo Mining, a mining contractor for

cement producer, was established in Batu Licin (South of Kalimantan), owned

by Pama and PT Indocement Tunggal Prakasa Tbk.

2000

Bonus shares 5 to 9, stock split and Employee Stock Option Plan were

implemented. At the same year, debt restructuring of UT Group -- consisted of

Berau Coal, UTE, Pama and PDP - has reached an agreement and a total

amount of US$ 278,5 million and Rp 147 billion was signed.

2001

Berau Coal opened a new coal mining site at Sambarata, East Kalimantan,

with proven reserves of 90 million tonnes. At the same year, UTE was

awarded as preferred supplier of General Electric, USA and was

acknowledged as a green grade company by Toyota Machinery, USA.

2002

UT transferred 39% of its ownership at Berau Coal to UT Heavy Industry (S)

Pte. Ltd.

2004

Signing of Creditor's Agreement in regards to UT's Debt Restructuring,

followed with the conduct of Limited Public Offering (Rights Issue) and buy

back of the Company's debt. At the same year, UT divested all of its

ownership at Berau Coal and Pandu Dayatama Patria, as well as released a part

of its ownership at Komatsu Indonesia, down to 5%. The debt buy back and

asset divestment allowed UT to strengthen its fundamental and able to

distribute cash dividend for the first time since monetary crisis. During the

year, UT was also formally inaugurated as the new distributor of Valmet

forestry equipment and Scania truck and bus.

2007

Through PAMA - one of our affiliated companies, we acquired PT Dasa Eka

Jasatama (DEJ) in Rantau, South Kalimantan as a coal mining concession

operating on a 12,500 hectare area.

2008

UT held the third Right Issue amounting Rp3,6 trillion. Up to date the

distributed amount of shares is recorded at 3,326,877,283 shares. The

Company also acquired PT Tuah Turangga Agung (TTA) with 93.33% share

ownership, of which 70% are effective shares.

The company has grown sinificantly since it was established which indicated

the sector still can grow highly for the next years, that it will have prospective value

for the company.


The company management as of December 31st, 2010

(www.unitedtractors.com) was :

a. Djoko Pranoto - President Director

Indonesian citizen, 55 years, President Director of the Company since May 2007,

after serving as Vice President Director in charge of Marketing and Sales

Operation since 2001. Held position as Marketing General Manager of the

Company since 1991 to 1996, prior to Director of the Company since 1997 to

2000. Positioned as Director of UT Heavy Industry (S) Pte. Ltd., Singapore since

1995. Became Vice President Commissioner of Komatsu Indonesia in 2001-2007

after serving as Commissioner in 1998-2000. Commissioner of PT Pamapersada

Nusantara and PT Traktor Nusantara since 1999. Appointed as Director of Astra

since 2008. Graduated in Mechanical Engineering from Trisakti University.

b. Gidion Hasan - Finance & Administration Director

Indonesian citizen, 37 years, appointed as Director of the Company, in charge of

Finance and Administration since 2006. Joined Astra in 1999, as Corporate

Planning and Investor Relation Manager, and as Chief of Corporate Planning and

Strategy. Prior to joining Astra, he was Corporate Finance Manager of Salim

Group. Appointed as President Director of Tuah Turangga Agung and

Commissioner of Astratel in 2008. Graduated in Finance from Rogers State

University, Oklahoma, USA, in 1994.

c. Edhie Sarwono - Human Capital, Environment, Social Responsibility & GA

Director

Indonesian citizen, 43 years, appointed as Director of Human Capital,

Environment, Social Responsibility & General Affairs of the Company since May

2007. Also holds position as Director of PAM Lyonnaise Jaya since 2006 to 2008.

Joined Astra in 1991 as engineer in Technology Development Division, and in

Astra Consulting Services until 1993. Appointed as Team Leader in Efficiency

Division in 1993-1998, and as Head of Environment, Health & Safety Division in

1998-2004. Held position as Head of Environment, Health & Safety & Social

Responsibility Division in 2004-2007. Graduated in Mechanical Engineering

from Brawijaya University.

d. Hendrik K. Hadiwinata - Non-Mining & Scania Sales Operation Director

Indonesian citizen, 56 years, appointed as Director of the Company in charge of

Non Mining and Truck Sales Operation since May 2007. Joined the Company

since 1979 as salesman until 1992. Held positions as Sales Manager Forestry

Department in 1992-2000 and as Head of Sales and Branch Operation Division in

2000-2007. Graduated in Industrial engineering from Bandung Institute of

Technology in 1979.

e. Iman Nurwahyu - Product Support Director

Indonesian citizen, 46 years, appointed as Director for Products Support of the

Company since May 2007. Joined the Company in 1988 and held position as

Head of Parts Department in several branch offices. Appointed as Head of

Inventory Department in 1993-1999, Deputy Head of Parts Division in 1999-

2002, and Head of Parts Division as well as Head of Human Resources and

General Affairs Division in 2002 to early 2007. Director of Komatsu

Remanufacturing Asia in 1998-2006 and appointed as President Director since

2007. Graduated in Agricultural Engineering from Padjadjaran University,

Bandung, in 1986.

f. Loudy Irwanto Ellias - Marketing, Truck Operation, and Forestry Contracting

Director

Indonesian Citizen, 44 years, appointed as Directors for Marketing, Truck

Operation, and Forestry Contracting of the Company since May 2011. Joined the

Company in 1989 and held last position as General Manager of Marketing

Division. Appointed as President Director of PT United Tractors Pandu

Engineering since 2008 and Commisioner of PT Patria Maritim Line and PT

Andalan Multi Kencana. Graduated from Ohlone College California, USA, in

1988




Industry can be analyzed by monitoring coal because all of the business fields

related to coal mining, i.e. :

• Construction machinery :

Construction machinery sales consists of many items, whereas the biggest

proportion was Komatsu sales for mining as the following figures.

Figure 4.4 – CM Revenue Breakdown (Rupiah billion)

Source : Investor Bulletin, Fourth Quarter 2010

Figure 4.5 – Komatsu Sales Volume By Sectors (in units)


• Mining contracting : related to coal mining

• Mining : related to coal mining

Therefore, industry analysis will be conducted through two steps for coal

industry analysis :


Global seaborne thermal coal demanded mostly by Asia especially India, Japan,

China and South Korea with increasing trend, as the following charts :

Figure 4.6 – Seaborne Thermal Coal Demand by Region

Source : Wood Mackenzie Coal Market Service, June 2010

Figure 4.7 – Seaborne Thermal Coal Demand by Region


On the other hand, global seaborne thermal coal supplied mostly by Indonesia

with increasing trend too, as the following charts :

Figure 4.8 – Global Seaborne Thermal Coal Supply 2009-2025


Figure 4.9 – Projected Supply by Exported Country


Furthermore, The World Coal Association stated that coal price was relatively

lower and more stable than oil and gas price based on historical data

(http://www.worldcoal.org/coal/market‐amp‐transportation/coal‐price/). It was

supported by historical global coal spot price index that the coal price was

relatively stable for 2009 and 2010.

Figure 4.10 – Historical Global Coal Spot Price Index 6,322GAR



Increasing trend of domestic coal demand was also supported by National Energy

Policy which boosted coal usage for energy optimization.

Figure 4.11 – National Energy Policy

Source : Ministry of Energy and Mineral Resources, March 2009

On the other hand, increasing trend of Indonesian coal supply was also indicated

by Ministry of Energy and Mineral Resources.

Figure 4.12 – Coal Production of Indonesia

Source : Ministry of Energy and Mineral Resources, March 2009

Furthermore, historical Indonesian coal price index was in line with historical

global coal spot price index that the coal price was relatively stable for 2009 and

2010.

Figure 4.13 – Historical Indonesian Coal Price Index


In conclusion, there was coal demand and supply increasing trend with

relatively stable price.


Based on net revenue, construction machinery and mining contracting were

the biggest contributors.

Figure 4.14 – Revenue Contribution by Business Units, 2006-2010


In order to support the operation, the company had national distribution

network, i.e. : Balikpapan, Banjarmasin, Bandarlampung, Jakarta, Jambi, Jayapura,

Makassar, Medan, Manado, Padang, Palembang, Palu, Pekanbaru, Pontianak,

Samarinda, Surabaya, Sorong, Tarakan. The distribution network will also support

the sector growth.

4.2.2.3.6 Income Statement

a. Revenue

Net revenue (received or receivable ) is revenue from the sale of products and

services in the normal course of business, net of discounts, returns, sales

incentives, value added tax and export duty. It is recognized if the amount of

revenue can be reliably measured, probable that future economic benefits will be

received and fulfill specific criterias i.e. :

• Mining contracting : services are completed and rendered to customers.

• Construction machinery and mining :

o Domestic sales goods are delivered and services are rendered to customers.

o Export sales : goods are shipped.

• Full Maintenance Contracts (“FMC”) : a percentage of completion basis if it

is estimated reliably based on cost incurred to date compared to estimated

total costs for each contract. If total contract costs will exceed total contract

revenue (probable), the loss is immediately recognized.

Revenue is translated by using the rate at the transaction date or average rate

when it is earned and incurred. The difference from the translation of subsidiaries

in foreign entity’s financial statements is recorded as “Exchange difference from

financial statements translation” in the equity.

Table 4.10 – Net Revenue by Parties and Business Units (in mio Rp.)


b. Expense

Expenses are recognized as incurred on an accrual basis. In addition, expense is

translated by using the rate at the transaction date or average rate when it is

earned and incurred. The difference from the translation of subsidiaries in foreign

entity’s financial statements is recorded as “Exchange difference from financial

statements translation” in the equity.

c. Taxation

The applied tax rate :

• Per January 1st, 2010 : flat rate of corporate income tax is 25%.

• Per January 1st, 2008 : corporate income tax rate reduction for public

companies in certain conditions.

The company has assessed and believed that it is applicable for 2010.


a. Potential dispute with local communities who request additional compensation

and employment.

b. Rising security concerns related with illegal mining activities.


for the value.

4.2.2.3.8 Risk

a. Foreign exchange rate risk : anticipated by hedging (forward and swap contract).

b. Interest rates risk : anticipated by derivative financial instruments

(forward rate agreement, interest rate swap – floating to fixed rate for minimum

40% of total borrowings)

c. Price risk for available for sale investments : anticipated by monitoring and

assessing periodically

d. Commodity prices risk : anticipated by forward contract for strategic reason

e. Credit risk : anticipated by monitoring reputation, credit ratings

and limiting the aggregrate risk to individual couterparty

f. Liquidity risk : anticipated by managing borrowing sources and

funding sources, cash and marketable securities availability


for the value.


a. Uncertainty due to delay of Autonomy Laws

b. Uncertainty due to changes of Mineral and Coal Mining Laws

The uncertainties will make the company value fluctuate based on the newest

government regulation.


The competitors of PT United Tractors, Tbk. had to be defined based on each

business fields, but the comparisons were not suitable i.e. :

a. Construction machinery :

As discussed before, the company’s sales mostly from Komatsu whereas

Komatsu’s market share was 46% and others were relatively small market share

so they can not be compared

Figure 4.15 – Domestic Market Share 12 M 10


b. Mining contracting : there was no company which was purely mining

contractor so it has no peer to compare.

c. Mining : the revenue contribution to the company was

relatively small, so the competitors will not be discussed.

From construction machinery, PT United Tractors, Tbk. dominated the

market. Based on the dominant position, it should can hold the same market share for

the next years.


The projections will use Discounted Cash Flow Method.

a. Sales

The quantity of Sales for 2011 is based on the company’s news (proportional of

each business fields), the rest is GDP Indonesia (International Monetary Fund,

World Economic Outlook Database, April 2011). Futhermore, it is supported

Ministry of Energy and Mineral Resources, March 2009, i.e. :

YearIndonesia coal production

(in mio ton)2010 2502015 3212020 361

Growth 2011-2015 28%Yearly growth 6%

Growth 2016-2020 12%Yearly growth 2%

While the price of product is increasing with the inflation rate (International

Monetary Fund, World Economic Outlook Database, April 2011).

b. Expenses

• COGS based on percentage of sales for average three years because net

revenue of coal mining started stable from 2008

• Selling and marketing expenses based on average percentage of sales for five

years

• General and administrative expenses based on average percentage of sales for

five years, except depreciation by calculating additional capex (20 years for

projects, average 5-20 years for routine capex)

• Other income/(expenses)

o Foreign exchange gain/(loss), net is zero because the foreign exchange is

relatively stable

o Interest and finance charges based on percentage of Sales

o Interest income is based on percentage of Sales

o Gain on sale of investment is zero because it is non recurring event

o Gain on disposal of fixed assets is zero because it is non recurring event

o Dividend income based on percentage of Sales because there is not enough

information

o Other income, net based on percentage of Sales because there is not enough

information

c. Others

• Shares of results of associates based on percentage of Sales

• Minority interest is zero because it is not the concern whether it is minority or

majority

d. Taxes

Tax rate was 20% because it is believed the company will meet the required

condition (based on 2010 condition).

e. Capex

Capex for 2011 is USD 520 mio, the rest based on percentage of Sales for three

years (routine capex, excluding Heavy equipment) because net revenue of coal

mining started stable from 2008.

f. Net Working Capital (NWC)

NWC based on inflation because macroeconomy data indicated stable condition

(the projection of exchange rate and GDP growth).

g. The discount rate

The discount rate is using CAPM, whereas risk free rate is FR0050 (Indonesia

obligation with the longest period per June 30th, 2011).

.

Beta 0,9702Rm 21,34%Rf 10,50%

R 21,02%

h. Growth for calculating Terminal Value

Growth is using GDP Indonesia (International Monetary Fund, World Economic

Outlook Database, April 2011).

The process and result of valuation as the following table, see Table :

• Table 4.11 – Net Revenue Comparison by Business Fields – PT United Tractors,

Tbk. (in mio Rp.)

• Table 4.12 – Net Revenue Calculation – PT United Tractors, Tbk. (in mio Rp.)

• Table 4.13 – Historical Income Statement – PT United Tractors, Tbk. (in mio Rp.)

• Table 4.14 – Historical Balance Sheet – PT United Tractors, Tbk. (in mio Rp.)

• Table 4.15 – Historical Cash Flow Statement – PT United Tractors, Tbk. (in mio

Rp.)

• Table 4.16 – Vertical Common Size Income Statement – PT United Tractors,

Tbk. (in mio Rp.)

• Table 4.17 – Valuation – PT United Tractors, Tbk. (in mio Rp.)

Based on Discounted Cash Flow, the intrinsic value of Heavy Equipment and

Mining sector as of December 31st, 2010 was Rp. 35.8 trillion.

4.2.2.4 Agribusiness Sector


It was founded in 1984 by acquiring PT Tunggal Perkasa Plantations to

develop palm business oil. Nowadays it manages 263,281 hectares in Sumatera,

Kalimantan and Sulawesi.

4.2.2.4.2 Company Milestone

The milestone company (www.astra-agro.co.id) was :

1984

Acquisition of PT Tunggal Perkasa Plantation with 15,000 hectares oil palm

plantation in Riau province

1988

PT Astra International made oil palm business unit : PT Suryaraya Cakrawala

on October 3rd, 1988

1989 PT Suryaraya Cakrawala was changed to be PT Astra Agro Niaga

1997

PT Astra Agro Niaga was merged with PT Suryaraya Bahtera to be PT Astra

Agro Lestari

1997 PT Astra Agro Lestari listed on the stock exchange on December 9th, 1997

The company has been built for a long time, that it should can develop further.


The company management as of December 31st, 2010 (www.astra-agro.co.id)

was :

a. Widya Wiryawan – President Director

An Indonesian citizen. He has been the Company’s President Director since May

2007. Previously he served as the Company’s Vice President Director since April

2006 after serving as the Vice President Director of PT Astra Otoparts Tbk. He

was previously Director of PT Astra Otoparts Tbk from 2000 to 2005. He was

Director of PT Federal International Finance from 1997 to 2000. He joined Astra

Group in PT Astra International Tbk since 1994. Graduated from Bogor Institute

of Agriculture in 1982 and University of Sydney, Australia in 1992.

b. Tonny Hermawan Koerhidayat - Vice President Director

An Indonesian citizen. He became Vice President Director of PT Astra Agro

Lestari Tbk in May 2007. He was previously Director from 2000 and Director in

several subsidiaries Company. He started his career with Astra Group at PT

Federal Motor (presently PT Astra Honda Motor) in 1982. He was as Production

Director (1999 to 2000) and was Production Deputy Director in 1998. He was

responsible as Plant Division Head from 1994 to 1998, and in 1994 he was

assigned as Planning and Production Control Group Head. In 1993 as Deputy of

Research and Development Division Head and was as Product Development

Department Head from 1989 to 1992. He is Mechanical Engineer graduated from

Bandung Institute of Technology in 1982.

c. Bambang Palgoenadi – Director

An Indonesian citizen. He has been the Company’s Director since May 2000 and

as the Commissioner in a number subsidiaries of the Company. He has been in the

Company since 1981. He served as the project leader in implementation of

plantation information system of the Astra Agro Lestari Group from 1995 to

1996. Since 1996 to 1998, he has served as the Company’s Deputy Director for

Production. He completed his education at the Bogor Institute of Agriculture in

1981, majoring in Agricultural Technology.

d. Santosa – Director

An Indonesian citizen. He has been the Company’s Director since May 2007. He

had served as Director of PT Asuransi Astra Buana (CFO) from May 2005 to

April 2007. He was Director (CFO) of PT Astra Graphia Tbk from May 2003 to

April 2005. He served as Director of Sales and Marketing of PT Astra CMG Life

from October 2001 to January 2003. In the period of 1990 - 2001, he served in

various positions as a staff and manager at a number of business units in Astra

Group. He joined Astra Group in 1989 as an IT Spesialist at PT Astra Graphia. He

graduated from Gajahmada University in Yogyakarta.

e. Juddy Arianto DP – Director

An Indonesian citizen. He has been the Company’s Director since May 2007. He

was President Director of PT Menara Terus Makmur from 2005 to May 2007. He

had served as Director of PT Federal Nittan Industries since 2001 to 2004.

Previously appointed as Division Head of Bearing Production of PT SKF

Indonesia since 1984 to 2000. He joined Astra Group in 1983. He graduated form

Indonesia University, majoring in Metallurgy.





India and China were projected to be the biggest CPO importir in 2011 as the

following :

Figure 4.16 – CPO Importir Rank Rank Country Imports (1000 MT)

1 India 7,100.00

2 China 6,650.00

3 EU-27 5,500.00

4 Pakistan 2,200.00

5 Malaysia 1,400.00

Source : www.indexmundi.com

On the other hand, Indonesia was projected to be the 1st rank as supplier and

exportir of Crude Palm Oil (CPO) in 2011 as the following :

Figure 4.17 – CPO Supplier Rank Rank Country Total Supply (1000 MT)

1 Indonesia 25,762.002 Malaysia 21,388.00

3 India 7,755.00

4 China 6,950.00

5 EU-27 5,734.00


Figure 4.18 – CPO Exportir Rank

Rank Country Exports (1000 MT)1 Indonesia 19,150.002 Malaysia 15,800.00

3 Papua New Guinea

525.00

4 Benin 500.00

5 United Arab Emirates

465.00



Indonesia consumption was projected to be the 3rd rank as exportir of Crude

Palm Oil (CPO) in 2011 as the following :

Figure 4.19 – CPO Domestic Consumption Rank

Rank Country Domestic Consumption (1000 MT)1 India 7,550.00

2 China 6,599.00

3 Indonesia 6,280.00

4 EU-27 5,370.00

5 Malaysia 4,070.00


Based on global and domestic market outlook, there is a prospective growth

for Agribusiness sector which has a positive impact for the value.


PT Astra Agro Lestari, Tbk. had many subsidiaries across Indonesia which

will support the industry prospective growth.

Table 4.18 – Subsidiaries of PT Astra Agro Lestari, Tbk.


4.2.2.4.6 Income Statement

a. Revenue

Net revenue is net of discounts, returns, trade allowances and export tax. It is

recognized if the significant risks and rewards of good ownership have been

transferred to the customers.

b. Expense

Expenses are recognized as incurred on an accrual basis.

c. Taxation

The applied tax rate : per January 1st, 2010 flat rate of corporate income tax was

25%.


Potential dispute with local communities who request additional

compensation and employment. It has to be considered carefully because it can limit

the prospective growth for the value.

4.2.2.4.8 Risk

a. Foreign exchange rate risk : anticipated by hedging

b. Interest rates risk : anticipated by derivative financial instruments

(forward rate agreement, interest rate swap – floating to fixed rate for minimum

40% of total borrowings)

c. Commodity prices risk : anticipated by forward contract

d. Liquidity risk : anticipated by managing borrowing sources and

funding sources, cash and marketable securities availability


for the value.






PER (see the Table 4.19 - Comparison of Agribusiness Industry), i.e. :

a. PT Perusahaan Perkebunan London Sumatra Indonesia Tbk

An Indonesia-based plantation company. It is engaged in the planting and

developing palm oil, rubber, cocoa, coconut, tea and seeds. The Company

operates plantations in North Sumatera, South Sumatera, Java, East Kalimantan,

North Sulawesi and South Sulawesi, with a total planted area of 100,296 hectares.

In addition, the Company develops plasma plantations on behalf of local

smallholders. The Company’s direct subsidiaries are PT Multi Agro Kencana

Prima, Lonsum Singapore Pte. Ltd., PT Tani Musi Persada, PT Sumatra Agri

Sejahtera and PT Tani Andalas Sejahtera. (www.reuters.com)

b. PT Bakrie Sumatera Plantations Tbk

A plantation company in Indonesia. It is engaged in the production and marketing

of natural rubber products and palm oil. The Company also provides plantation

management services and has subsidiaries which are engaged in investment

management. Its two business segments are rubber and oil palm and derivatives.

The Company has 66,560 hectares of plantation area in Kisaran, Asahan District,

North Sumatra. Its subsidiaries include PT Bakrie Pasaman Plantations, PT

Agrowiyana, PT Agro Mitra Madani and PT Huma Indah Mekar.

(www.reuters.com)

Comparing to competitors, PT Astra Agro Lestari, Tbk. was a dominant

player with the largest planted area, that it should can hold the same market share for

the next years.


The projections will use Discounted Cash Flow Method.

a. Sales

Sales mainly consisted of oil palm, so the projection will emphasize it (see Table

4.20 – Net Revenue Comparison by Products – PT Astra Agro Lestari, Tbk. (in

mio Rp.)). The quantity of Sales is based on the Professor Erliza Hambali of the

Bogor Institute of Agriculture that CPO industry growth is average 10,3%

annually. While the price of product is based on the inflation rate (International

Monetary Fund, World Economic Outlook Database, April 2011).

b. Expenses

• COGS based on percentage of sales for average five years

• Selling expenses based on average percentage of sales for five years

• General and administrative expenses based on average percentage of sales for

five years, except depreciation by calculating additional capex (average 5-20

years).

• Other income/(expenses)

o Foreign exchange gain/(loss), net is zero because the foreign exchange is

relatively stable

o Difference between accumulated plasma plantation development based on

percentage of Sales for five years

o Interest and finance charges based on percentage of Sales for five years

o Interest income is based on percentage of Sales for five years

o Amortisation of goodwill based on average percentage of sales for five

years

o Gain on disposal of plantation assets is zero because it is non recurring

event

o (Loss)/gain from commodity forward contract is zero because it is non

recurring event

o Other income, net based on average percentage of sales for five years

c. Others

• Minority interest is zero because it is not the concern whether it is minority or

majority

d. Taxes

Tax rate is 25%.

e. Capex

Capex based on average percentage of sales for five years (routine capex) where

as company did not mention Capex for 2011 (www.economy.okezone.com).

f. Net Working Capital (NWC)

NWC based on inflation NWC because macroeconomy data indicated stable

condition (the projection of exchange rate and GDP growth).

g. The discount rate

The discount rate is using CAPM, whereas risk free rate is FR0050 (Indonesia

obligation with the longest period per June 30th, 2011)

Beta 0.9412Rm 23.93%Rf 10.50%

R 23.14%

h. Growth for calculating Terminal Value

Growth is using GDP Indonesia (International Monetary Fund, World Economic

Outlook Database, April 2011).

The process and result of valuation as the following table :

• Table 4.21 – Historical Income Statement – PT Astra Agro Lestari, Tbk. (in mio

Rp.)

• Table 4.22 – Historical Balance Sheet – PT Astra Agro Lestari, Tbk. (in mio Rp.)

• Table 4.23 – Historical Cash Flow – PT Astra Agro Lestari, Tbk. (in mio Rp.)

• Table 4.24 – Vertical Common Size Income Statement – PT Astra Agro Lestari,

Tbk. (in mio Rp.)

• Table 4.25 – Valuation – PT Astra Agro Lestari, Tbk. (in mio Rp.)

Based on Discounted Cash Flow, the intrinsic value of Agribusiness sector as

of December 31st, 2010 was Rp. 35.3 trillion.

4.2.2.5 Infrastructure and Logistics


Infrastructure and Logistics consisted of :

a. Logistic Value Chain : PT Serasi Autoraya

It operates :

• Vehicle lease/rental services : TRAC (SERA)

• Used car sales operations : Mobil 88 and Ibid

• Logistics operations : SELOG and PT Toyofuji Serasi

Indonesia

• Public transportation line : Orenz Taxi

b. General Infrastructure :

• PT Astratel Nusantara owned 79,31% PT Marga Mandalasakti (involved in

infrastructure projects), 49% of PT PAM Lyonnaise Jaya (clean water

provider in western part of Jakarta) and 40% of PT Gresik Distribution

Terminal (operates oil tanking terminal).

• PT Intertel Nusaperdana owned 31% of PT Toyofuji Logistic Indonesia (a

pre-shipment marshalling yard for export and import trans-shipment)


The company management as of December 31st, 2010 (www.astra.co.id) was

Angky Tisnadisastra – Director in Charge for Astra System II (Infrastructure &

Logistic Value Chain).




Based on macro assumption (the projections of inflation rate, exchange rate

and GDP growth), the condition is conducive to run business. Therefore, Information

technology sector will also increase because it supports other businesses which

increases the company value.


Astratel purchased additional 19% ownership of PT PAM Lyonnaise Jaya

form Citigroup Financial Products Inc. In addition, there was 7% increase in traffic

volume for the toll road it operated.

The acquisition and the increasing traffic indicated the growth which in line

with the industry that will increase the company value.


Potential dispute with local communities for land settlement. It has to be

considered carefully because it can limit the growth for the value.

4.2.2.5.6 Risk

Foreign exchange rate risk : anticipated by hedging. It has to be considered

carefully because it can limit the growth for the value.





The competitors of Infrastructure and Logistic sector had to be defined based

on each business fields, i.e. :

a. Logistic Value Chain : no public company which is comparable

b. General Infrastructure : no public company of public water provider which is

comparable (based on percentage of share of results)

Table 4.26 – Share of results for Infrastructure, Logistics and Others 2010

Amount %1 PT PAM Lyonnaise Jaya 38 73.08%2 Others (below 50 bio each) *) 14 26.92%

52 100.00%Total

Share of results SectorNo.

*) Consist of PT Toyofuji Logistics Indonesia, PT Marga

Trans Nusantara, PT Gresik Distribution Terminal and PT Toyofuji Serasi Indonesia




projection will use Relative Valuation (Price-Earnings ratio). In addition, the chosen

comparable company is PT Astra International, Tbk. because no comparable

company.

PT Astra International, Tbk. 220,837,765 15.37 x



PT Astra International, Tbk. - InfrastructureSelected Multiples 15.37 x Parameter Value - Equity Income (in mio Rp. rounded) 52,000.00

Enterprise Value (in mio Rp.) 799,267.40Less: Interest Bearing Debt (in mio Rp.) 0.00

Indicated Equity Value (in mio Rp.) 799,267.40Add: Control Premium of (in mio Rp.) 0.00

Fair Value - based on % ownership (in mio Rp.) 799,267.40

Public Companies Market Capital (in mio Rp.)

PER

Based on Relative Valuation, the intrinsic value of Infrastructure and

Logistics sector as of December 31st, 2010 was Rp. 0.8 trillion.

4.2.2.6 Information Technology Sector


Information Technology sector consisted of :

a. Document Solution : Astra Graphia Document Solution (AGDS)

AGDS is Fuji Xerox, Co. Ltd. exclusive distributor.

b. IT Solution : Astra Graphia Informasion Technology (AGIT)

AGIT provides services for infrastructure, professional and outsourcing with

world class partners e.g. Airspan, Cisco, Ericson, HP, IBM, Microsoft, Oracle,

SAP and SUN.


The company management as of December 31st, 2010 (www.astra.co.id) was

Angky Tisnadisastra – Director in Charge for Astra System I (Documentation &

Information Technology Services).




Based on macro assumption (the projections of inflation rate, exchange rate

and GDP growth), the condition is conducive to run business. Therefore, Information

technology sector will also increase because it supports other businesses which

increases the company value.


AGDS had 22 branches and 77 service points. In addition, it cooperated with

bookstore chain outlet, a consumer eletronics store chain and computer shops for low-

end products. Furthermore, AGIT expanded its business by concluding a sales

arrangement for a Tracking & Monitoring system.

The branches and service points will support the growth. In addition, the

expansion indicated the growth which in line with the industry that will increase the

company value.


a. Status as exclusive distributor because of sales and service distribution network.

b. Competition

It has to be considered carefully because it can limit the growth for the value.

4.2.2.6.6 Risk

a. Exchange rate risk : anticipated by hedging

b. Technological change risk : anticipated by finding innovative solution and

improving human competencies

It has to be considered carefully because it can limit the growth for the value.


Change of government regulation, that will make the company value fluctuate

based on the newest government regulation.



PER (see the Table 4.27 - Comparison of Information Technology and Equipment

Industry), i.e. : PT Metrodata Electronics Tbk : an Indonesia-based information

technology (IT) company. The Company is engaged in the provision of IT products

and services and other high tech products and services. It operates in two segments:

distribution, which include the sale of hardware and basic peripherals, such as data

storage devices, terminals, memory and peripheral, and solutions, which include the

provision of maintenance service, hardware rental, sale of system management

software, middleware, serverware and system level software, and professional service

for consultation, implementation and training. The Company’s subsidiaries are PT

Mitra Integrasi Informatika, PT Metrodata E Bisnis, PT E Metrodata Com, PT Sun

Microsystems Indonesia, Soltius Asia Pte. Ltd., TTS-Infotech Pte.Ltd., Soltius

(Thailand) Limited, Soltius Australia Pty. Ltd. and PT Soltius Indonesia.

(www.reuters.com)

Comparing to competitors, PT Astra Graphia, Tbk. dominated the market

because it mostly supported PT Astra International, Tbk. and subsidiaries.


Because of relatively small contribution, the projection will use Relative

Valuation (Price-Earnings ratio). In addition, the chosen comparable companies based

on the same industry, similar company structure and PER (see the following table).

Market Capital(in mio Rp.)

Metrodata Electronics Tbk 272,707 8.71 x Astra Graphia Tbk 930,659 7.86 x



Astra Graphia TbkSelected Multiples 7.86 x Parameter Value - % of Profit after tax (in mio Rp.) 91,025.51

Enterprise Value (in mio Rp.) 715,430.00Less: Interest Bearing Debt (in mio Rp.) 0.00

Indicated Equity Value (in mio Rp.) 715,430.00Add: Control Premium of (in mio Rp.) 0.00

Fair Value - based on % ownership (in mio Rp.) 715,430.00

Public Companies PER

Selected multiple used is the low one because PER of PT Astra International, Tbk.

compared to the competitor is lower.

Based on Relative Valuation, the intrinsic value of Information Technology

sector as of December 31st, 2010 was Rp. 0.7 trillion.

4.2.3. Combining Valuation

After valuing each sectors, the value is calculated to get the overall value of

the company.

Table 4.28 – Combining Valuation

No. Sector Valuation % *) Amount 1 Automotive 66,062,525 66,062,525 2 Financial services 28,204,163 28,204,163 3 Heavy equipment & mining 35,843,091 59.50% 21,326,639 4 Agribusiness 35,304,914 79.70% 28,138,016 5 Infrastructure & logistic 799,267 799,267 6 Information technology 715,430 715,430 7 Elimination (1,387,437) -0.83% 11,532

145,257,572

Shares 4,048,355,314 Value pershare 35,881

Total

*) Based on percentage of ownership for Heavy equipment & mining and

Agribusiness, Elimination based on Average 3 years of Net revenue The valuation uses assumption that no additional or payment of Debt.

The combination of the calculated valutions before produce the intrinsic value

as of December 31st, 2010 Rp. 35,881 per share.

4.2.4 Comparing Valuation

Based on Indonesia Capital Market data, stock price of PT Astra International,

Tbk. as of December 31st, 2010 was Rp. 54,550,-/share. On the other hand, the

intrinsic value of PT Astra International, Tbk. as of December 31st, 2010 was Rp.

35,881 per share.

The stock price was higher than the intrinsic value based on the valuation, so

the stock was overpriced.

chapter iv case description & analysisthesis.binus.ac.id/doc/bab4/bab 4_10.pdf · commissioner...

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