mppa (stock analysis)
TRANSCRIPT
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 1/34
MM 5009
FINANCE
STOCK ANALYSIS
PT Matahari Putra Prima Tbk (MPPA)
Executive 47 (MBA)
Sufian (29112017)
MASTER OF BUSINESS ADMINISTRATION
SCHOOL OF BUSINESS AND MANAGEMENT
INSTITUT TEKNOLOGI BANDUNG
2013
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 2/34
MM 5009 – FINANCE STOCK ANALYSIS
1SUFIAN (29112017) MBA X-47
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 3/34
MM 5009 – FINANCE STOCK ANALYSIS
2SUFIAN (29112017) MBA X-47
TABLE OF CONTENTS General Overview .................................................................................................................................................... 3
Macroeconomic overview........................................................................................................................................ 3
Gross Domestic Product (GDP).............................................................................................................................. 4
Unemployment Rate ................................................................................................................................................ 6
Outlook of Modern Retail Industry ....................................................................................................................... 6
Consumer Spending ................................................................................................................................................ 8
Inflation Rate ........................................................................................................................................................... 8
Company Overview ..................................................................................................................................................... 9
PT Matahari putra prima tbk (MPPA) Company Profile ................................................................................... 9
History of the development of PT. Matahari Putra Prima Tbk. (MPPA) ........................................................ 10
ownership and major holders ............................................................................................................................... 12
business activities and strategies .......................................................................................................................... 13 The core retail business of Matahari Group ................................................................................................... 13
Supported by Nationwide Network .................................................................................................................. 13
Financial Performance Overview............................................................................................................................. 14
Financial Ratios & Margins.................................................................................................................................. 14
Dividend and stock .................................................................................................................................................... 15
Dividend.................................................................................................................................................................. 15
Considerations in the Formulation of Dividend Policy ........................................................................................... 16
Cash Dividend Payment .......................................................................................................................................... 16
growth over prior year .......................................................................................................................................... 18
Stock theory ............................................................................................................................................................... 20
MPPA stock market snapshot .............................................................................................................................. 21
Investment Parameter ........................................................................................................................................... 21
Stock valuation........................................................................................................................................................... 22
Methodology ............................................................................................................................................................ 22
Required Rate on Equity ...................................................................................................................................... 23
Growth ................................................................................................................................................................. 24
Value of Equity .................................................................................................................................................... 24
Value Estimation ......................................................................................................................................................... 25
Exhibit 1 – INCOME STATEMENT .......................................................................................................................... 27
Exhibit 2 – BALANCE SHEET .................................................................................................................................. 28
Exhibit 3 – CASH FLOW............................................................................................................................................ 32
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 4/34
MM 5009 – FINANCE STOCK ANALYSIS
3SUFIAN (29112017) MBA X-47
I NDONESIA MACRO-ECONOMIC OUTLOOK
GENERAL OVERVIEW1
Indonesia lies between latitudes 11°S and 6°N, and longitudes 95°E and 141°E. It
consists of 17,508 islands, about 6,000 of which are inhabited. These are scattered over both
sides of the equator. The largest are Java, Sumatra, Borneo (shared with Brunei and Malaysia),
New Guinea (shared with Papua New Guinea), and Sulawesi. Indonesia shares land borders with
Malaysia on Borneo, Papua New Guinea on the island of New Guinea, and East Timor on the
island of Timor. Indonesia shares maritime borders across narrow straits with Singapore,
Malaysia, the Philippines, and Palau to the north, and with Australia to the south. The capital,
Jakarta, is on Java and is the nation's largest city, followed by Surabaya, Bandung, Medan, and
Semarang.
MACROECONOMIC OVERVIEW2
Indonesia has the largest economy in Southeast Asia and is one of the emerging market
economies of the world. The country is also a member of G-20 major economies and classified
as a newly industrialized country. It has a market economy in which the government plays a
significant role through ownership of state-owned enterprises (the central government owns
more than 160 enterprises) and the administration of prices of a range of basic goods includingfuel, rice, and electricity. In the aftermath of the financial and economic crisis that began in mid-
1997 the government took custody of a significant portion of private sector assets through
acquisition of nonperforming bank loans and corporate assets through the debt restructuring
process. Since 2004 the economy has recovered and growth has accelerated to over 6% in recent
years.
Indonesia regained its investment grade rating from Fitch Rating in late 2011, and from
Moody's Rating in early 2012, after losing its investment grade rating in December 1997 at the
onset of the Asian financial crisis which Indonesia spent more than Rp450 trillion ($50 billion)
to bail out lenders from banks. Fitch raised Indonesia's long-term and local currency debt rating
1 http://en.wikipedia.org/wiki/Indonesia2 http://en.wikipedia.org/wiki/Economy_of_Indonesia
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 5/34
MM 5009 – FINANCE STOCK ANALYSIS
4SUFIAN (29112017) MBA X-47
to BBB- from BB+ with both ratings is stable. Fitch also predicted that economy will grow at
least 6.0% on average per year through 2013, despite a less conducive global economic climate.
Moody’s raised Indonesia's foreign and local currency bond ratings to Baa3 from Ba1 with a
stable outlook.
Indonesia, a vast polyglot nation, grew an estimated 6.1% and 6.4% in 2010 and 2011,
respectively. The government made economic advances under the first administration of
President YUDHOYONO (2004-09), introducing significant reforms in the financial sector,
including tax and customs reforms, the use of Treasury bills, and capital market development and
supervision. During the global financial crisis, Indonesia outperformed its regional neighbors and
joined China and India as the only G20 members posting growth in 2009. The government has
promoted fiscally conservative policies, resulting in a debt-to-GDP ratio of less than 25%, afiscal deficit below 3%, and historically low rates of inflation. Fitch and Moody's upgraded
Indonesia's credit rating to investment grade in December 2011. Indonesia still struggles with
poverty and unemployment, inadequate infrastructure, corruption, a complex regulatory
environment, and unequal resource distribution among regions. The government in 2013 faces
the ongoing challenge of improving Indonesia's insufficient infrastructure to remove
impediments to economic growth, labor unrest over wages, and reducing its fuel subsidy
program in the face of high oil prices.
GROSS DOMESTIC PRODUCT (GDP)
The GDP in Indonesia was worth US$ 846.832 billion in 2012. It represents 1.37% of
world economic. In the last 10 years, Indonesia GDP has a constant growth each year.
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 6/34
MM 5009 – FINANCE STOCK ANALYSIS
5SUFIAN (29112017) MBA X-47
On the sector basis, the source of growth has started to be more balanced as the tradable sectors
that accounted 46.9% of total GDP, rose by 4.5% YoY in the 2011, while non-tradable sectors
grew by 8.3% YoY in the same period vs. 8.2% YoY last year. The strong pickup in tradable
sector was driven by the manufacturing sector that grew by 6.2% YoY in 2011, the highest
growth since 2004. The strong growth was driven by domestic-based manufacturing, such as
iron, textile, food, and transportation industries. Expansion in manufacturing sector indicates
improvement in the economic capacity, which will help sustain economic growth in the future.
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 7/34
MM 5009 – FINANCE STOCK ANALYSIS
6SUFIAN (29112017) MBA X-47
UNEMPLOYMENT R ATE
With around 240 million people, Indonesia is the fourth most populous country in the
world (after China, India and the United States). Moreover, the country has a young population
as around half of the total population is below the age of 30 years. Combined, these two features
imply that Indonesia currently contains a large labor force; one that will grow larger in the
foreseeable future.
OUTLOOK OF MODERN R ETAIL INDUSTRY
Strong underlying economic growth, large population (the world’s fourth largest and
growing), rising per-capita incomes and the continued development of organized retailinfrastructure are key factors behind the substantial growth forecast in Indonesian retail sales. In
2011 and 2012, modern retail industry is estimated to grow by approximately 20% YoY each.
Retail I ndustry Growth
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 8/34
MM 5009 – FINANCE STOCK ANALYSIS
7SUFIAN (29112017) MBA X-47
We are on the view that Indonesian modern retail industry still has large room to grow.
Enhancing consumption, which contributes as much as 57.5% for Indonesian GDP growth of
6.4% in 1H12, large population of around 257 million, and increasing income per capita to over
USD 4,000 in 2012, support the growth of modern retail industry. Else, demographic factors
suggest scope for strong medium-to-long term growth in retail sales. The population is youthful
– around 28.8% of people are aged fewer than 15, and around 5% are above 65 years. The
population itself also recorded an increasing middle-class society to over 40%, or amounted to
23 million families. Indonesian Retail Merchants Association (“Aprindo”) estimates that the
sales from national modern retail will lift by 15% YoY in 2012, or accounted to Rp 138 trillion,
with 1st and 2nd semester contribution of 40%: 60%.
With such supporting situation, many Indonesia’s major retailers, especially modern
market retailers that focus on food business, are expanding rapidly and the competition remains
fierce in the future. In the minimarts business segment, PT indomarco Prismatama, the owner of
Indomaret mini markets, and PT Sumber Alfaria Trijaya, which operates Alfamart, has dominate
the minimart business, with total of around 10,000 stores of minimarts. Meanwhile, in the
hypermarkets segments, Carrefour and Hypermart dominate with outlets of 85 and 75,
respectively, as of mid of November 2012.
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 9/34
MM 5009 – FINANCE STOCK ANALYSIS
8SUFIAN (29112017) MBA X-47
CONSUMER SPENDING
Consumer spending, also called consumer consumption or expenditure is the amount of
money that households spend on goods and services in order to satisfy their needs. Similar to
GDP, the amount of consumer spending in Indonesia has continuously increased since 2003 to2012. In the last quarter of 2012, it’s stated that consumer spending in 4th quarter has reached
368,212.80 billion. The figure below shows the trend of Indonesia consumer spending since 1 st
quarter of 2003 to 4th quarter of 2012.
From the chart shown in the figure below, it can be indicated that Indonesia economic is
performing well. The consumer expenditure is one of indicator to measure that the economy is in
healthy condition. So household spend more of their money to goods and services to satisfy their
needs
INFLATION R ATE
Indonesian statistic biro (BPS) reported that the inflation rate in Indonesia was recorded
at 5.57% in April 2013. The statistic shows that there’s the variance of inflation rate since 2003
till present (the figure below show the inflation rate from 2013 t0 2012). The average of inflation
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 10/34
MM 5009 – FINANCE STOCK ANALYSIS
9SUFIAN (29112017) MBA X-47
rate is around 7.8 while the highest one was 18.38 around last quarter of 2005 and the lowest was
3.43 around April 2010.
COMPANY OVERVIEW
PT MATAHARI PUTRA PRIMA TBK (MPPA) COMPANY PROFILE
The Company is domiciled at Menara Matahari 20th floor, Boulevard Palem Raya # 7, Lippo
Village - Tangerang, Banten.
Homepage: www.matahari .co.id
Vision: To be consumer’s most preferred
retailer
Mission: To consistently bring value fashion-
right products and services that enhances the consumer’s quality of lifestyle
PT Matahari Putra Prima Tbk, together with its subsidiaries, operates a chain of retail
stores. It sells clothes, accessories, bags, shoes, cosmetics, electrical equipment, toys, stationery,
books, drugs, and daily need products through its chain of stores. The company also operates
family entertainment centers under the name Time Zone. In addition, it involves in financing,
general trading, sale, and marketing of mineral water; operating restaurants and drugstores; and
consumer financing activities. As of November 2nd, 2012, MPPA has operated 75 Hypermart,
26 Foodmart and 75 Boston HBC stores with total operational space of more than 500,000 sqm.
MPPA has received several awards such as Museum Indonesia (“MURI”) records for displaying
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 11/34
MM 5009 – FINANCE STOCK ANALYSIS
10SUFIAN (29112017) MBA X-47
219,860 page views in the internet. MPPA also received Corporate Social Responsibility
(“CSR”) Award from Seputar Indonesia (“Sindo”) Newspaper, 2011 Retail Asia Top 500
Awards from Retail Asia, Euromonitor International and KPMG, and 1st Ranking of SWA 100
Indonesia Best Public Companies in 2011. In line with the growth of modern retail industry in
Indonesia and buyed by its huge customer base, MPPA has a bright prospect ahead.
Listed Since: 21 December 1992 Beta to Composite: 0.94
Industry: TRADE, SERVICES & INVESTMENT Weight to Composite: 0.00%
Sector: Retail Trade Beta to industry: 0.76
Market Cap: Rp. 12,965,471,310,000 Weight to industry: 0.00%
Shares Outstanding: 5,576,546,800
HISTORY OF THE DEVELOPMENT OF PT. MATAHARI PUTRA PRIMA TBK .
(MPPA)4
1958 : First store in Pasar Baru,Jakarta
1972 : Pioneer of Department Store concept in Indonesia
1980 : Open the first store outside Jakarta - Sinar Matahari Bogor
1988 : Core Business Expansion to Supermarket Operation.
1st Rights Issue - IDR 75B
1992 : IPO at Jakarta Stock Exchange and Surabaya Stock Exchange
1996 : Issuance of 5-year US$100 Million Bond & 2nd Rights Issue - Rp 226B
1997 : Multipolar became majority shareholder 3rd Rights Issue Rp 902B
2000 : Launching Of Matahari Club Card (MCC)
2001 : Settlement of 5-year US$ 100 Million Bond
2002 :
o New Management Team
o Core Business Restructuring: Matahari Department Store,
o Matahari Supermarket & TimeZone
3 http://www.tradergods.com/stock/stockdetail.aspx?stock=MPPA4 http://www.mataharigroup.co.id
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 12/34
MM 5009 – FINANCE STOCK ANALYSIS
11SUFIAN (29112017) MBA X-47
o Independent and transparent Business Units
o Issuance of 5-year Obligasi I - Rp 450 Billion
2003 :
o Consolidation Year
o Closure of Non-profitable storeso Re-focus to internal infrastructure, resources & company’s Foundation
2004 :
o Launch of Hypermart
o Top 500 As-Pac Retail Award: #1- Indonesia
o Issuance of 5-year Obligasi II : Rp 300 B & Syariah I Rp 150 B
2005 : Successful aggressive expansion : 10 Department store,4 Kids2Kids,13
Hypermart,4 Cut Price,1 Matahari Supermarket, First Matahari Dept. Store in China,
Top 500 As-Pac Retail Award:#1- Indonesia
PT Matahari Putra Prima Tbk (MPPA) was established on March 11, 1986. Currently, MPPA
through its Food Business Division (Matahari Food Business- MFB) engaged in FMCG industry
in the form of Hypermarket and Supermarket, as well as Department Store through Matahari
Department Store (20% ownership in joint venture with CVC Capital Partners). In addition,
MPPA also has several supporting business i.e. Timezone family entertainment centers, Times
bookstore, Restaurant Services and FMCG logistic and distribution. MPPA’s hypermarket
known as “Hypermart” is the second largest hypermarket in Indonesia with market share of
34.3% in 2011.
MPPA’s business network:
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 13/34
MM 5009 – FINANCE STOCK ANALYSIS
12SUFIAN (29112017) MBA X-47
OWNERSHIP AND MAJOR HOLDERS
The new structure of BOC & BOD for the period of 2013-2014 is as follow:
Board of Commissioners:
President Commissioner & Chairman : John Bellis
Vice President Commissioner : Theo L. Sambuaga
Independent Commissioner : Travis Saucer
Independent Commissioner : Steve A. Martin
Independent Commissioner : Chua Siang Hwee, Jeffrey
Commissioner : Ali ChendraCommissioner : Gouw ViVen
Board of Directors:
President Director : Benjamin J. Mailool
Vice President Director : Carmelito J. Regalado (non-affiliated)
Director : Richard H. Setiadi
Director : Lina H. Latif
Director : IshakKurniawanDirector : Johanes Jany
Shareholders (per February 2013):
1. DBS Bank Ltd S/A PT. Multipolar Tbk 2,701,386,000 48.44 %
2. Prime Star Pacific Investment Pte. Ltd. 407,307,600 7.30 %
3. PT Star Pacific Tbk 338,419,625 6.07 %
4. PT Ciptadana Securities 319,110,000 5.72 %
5. Public (< 5%) 1,810,323,575 32.46 %
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 14/34
MM 5009 – FINANCE STOCK ANALYSIS
13SUFIAN (29112017) MBA X-47
BUSINESS ACTIVITIES AND STRATEGIES
THE CORE RETAIL BUSINESS OF MATAHARI GROUP
The Company's core key retail business activities include active retail operation within
FMCG (Fast Moving Consumers Goods) industry through hypermarket and supermarket
formats, supported by several other minor smaller businesses such as health and beauty centers,
family entertainment centers, international bookstores, restaurant services and FMCG logistic
and distribution.
In addition, the Company also has a strategic alliance with its strategic international
partner in owning and managing the Indonesia's leading department store chain, Matahari
Department Store.
SUPPORTED BY NATIONWIDE NETWORK
In the past six years, the number of Hypermart outlet has increased 23.0% a year on the
average. In 2005, the number of Hypermart outlet was 17 units and increased to 59 units in 2011.
This retail networks are spread over 32 cities in Indonesia. Besides, Hypermart is backed up with
three distribution centers which have an important role in the distribution of goods to Hypermart
and Foodmart. The warehouses of the three distribution centers are located in Surabaya, Balaraja
and Cibitung. Up to September 2011, MPPA has opened 5 of 15 new stores which will increase
about 102,500 sqm sales area. The new stores are located in North Lippo Karawaci, Ciputra
World Surabaya, Serang, Kediri and Gresik, while the rest is planned to be opened in Kudus,
Batu Malang, Cirebon, Ciputra Sraya (Sumatera), Gorontalo, Sidoarjo and Palembang.
Furthermore, MPPA plans to open 15 new stores in 2012 and about 80 new stores in the next
five years. We believe, thus extensive distribution network will boost MPPA sales in the
subsequent periods
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 15/34
MM 5009 – FINANCE STOCK ANALYSIS
14SUFIAN (29112017) MBA X-47
FINANCIAL PERFORMANCE OVERVIEW
FINANCIAL R ATIOS & MARGINS
The PT Matahari Putra Prima Tbk financial analysis covers the income statement and
ratio trend-charts with balance sheets and cash flows presented on an annual basis (please look at
the Exhibit 1, 2 and 3). The report outlines the main financial ratios pertaining to profitability,
margin analysis, asset turnover, credit ratios, and company’s long-term solvency. This sort of
company's information will assist and strengthen company’s decision-making processes.
MPPA’s distribution
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 16/34
MM 5009 – FINANCE STOCK ANALYSIS
15SUFIAN (29112017) MBA X-47
DIVIDEND AND STOCK
DIVIDEND
Dividend policy refers to the explicit or implicit decision of the board of directors
regarding the amount of residual earnings (past or present) that should be distributed to the
shareholders of the corporation
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 17/34
MM 5009 – FINANCE STOCK ANALYSIS
16SUFIAN (29112017) MBA X-47
CONSIDERATIONS IN THE FORMULATION OF DIVIDEND POLICY
Profitability and Liquidity
Legal Constraints
Contractual constraints
Growth prospects Owner considerations
Market considerations
Industry practice
Shareholder expectation
CASH DIVIDEND PAYMENT
As a public company, it is common that company paid dividends to the investor who put their
money to the company. PT. Matahari Putra Prima Tbk, as one reputable public company from
year to year always pay the dividends to their investor. It was a part of corporate policy to meet
some of investor expectation to the company. Some of them are really expecting gain from their
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 18/34
MM 5009 – FINANCE STOCK ANALYSIS
17SUFIAN (29112017) MBA X-47
investment from the dividends payment. Dividends payment policy in PT. Matahari Putra Prima
Tbk was based on the decision of shareholders meeting agreement which normally held annually
by the investor. The agreement will give guidance to the company to share corporate gain to the
investor as dividends payment.
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 19/34
MM 5009 – FINANCE STOCK ANALYSIS
18SUFIAN (29112017) MBA X-47
PT Matahari Putra Prima Tbk (MPPA) paid cash dividends fiscal year 2012 amounting to
Rp186 per share on May 29, 2013. According to the written statement of the company, on
Thursday, cash dividends were distributed to shareholders whose names are registered in the list
of shareholders (the record date) on May 20, 2013. The schedule for Cum and Ex Dividend in
cash in the regular market and negotiations were conducted on May 15 May 16, 2013, while for
Cum and Ex Dividend in cash in the cash market on 20-21 May 2013. As is known, MPPA
shareholders in the AGM held on 24 April 2013 yesterday has approved a cash dividend
amounting to Rp1 trillion, equivalent to Rp186 per share. In addition, the benefits achieved from
the results of the company, about 2 billion set aside as a reserve fund, and about Rp1, 8 trillion
allocated as accumulated retained earnings.
GROWTH OVER PRIOR YEAR
Year on year, growth in dividends per-share fell 98% while earnings per share excludig
extraordinary items rose109.97%. Additionally when measured on a five year annualized basis,
both dividend per share and earnings per share growth ranked in-line with the industry average
relative to its peers.
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 20/34
MM 5009 – FINANCE STOCK ANALYSIS
19SUFIAN (29112017) MBA X-47
Last Dividend Paid refers to dividend per share (DPS) paid to the shareholder the last
time dividends were issued by a company. It its conventional sense, dividends refer to the
distribution of some of a company's net earnings or capital gains decided by the board of
directors.
Matahari Last Dividend =Last Profit Distribution Amount
Total Shares= 0
Many stable companies today pay out dividends to their shareholders in the form of income
distribution, but high-growth firms almost never offer dividends because all of their earnings are
reinvested back to the business.
Based on recorded statements Matahari Putra Prima Tbk has Last Dividend Paid of 0.0. This
indicator is about the same for average (which is currently at 0.0) sector, and about the same as
Last Dividend Paid (which currently averages 0.0) industry, this indicator is about the same for
all stocks average (which is currently at 0.0).
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 21/34
MM 5009 – FINANCE STOCK ANALYSIS
20SUFIAN (29112017) MBA X-47
STOCK THEORY
Stock is a share in the ownership of a company. Stocks represent a claim on the
company’s assets and earning. As acquire more stock, the ownership stake in the company
becomes greater. Holder of company stock is called shareholder which represented by having a
stock certificate. Stock certificate is a fancy piece of paper that is proof of shareholder
ownership. Importance of being shareholder is that entitlement to a portion of the company’s
profits and has a claim on assets. Shareholders earn a lot if the company is successful, but they
also stand to lose their entire investment if the company isn’t successful. Another important
feature of stock is its limited liability, as an owner of the stocks; shareholders are not personally
liable if the company is not able to pay its debt.
Basically every company needs to raise money. On doing that, company was able to
choose either borrow or from somebody (issuing debt) or raise it by selling part of the company,
which is known as issuing stock. A company can borrow by taking a loan from a bank or by
issuing bonds. It’s called debt financing. Issuing stock is called equity financing. Issuing stock is
advantageous for the company because it do not require the company to pay back the money or
make interest payment along the way. The first scale of stock which is issued by the private
company is called Initial Public Offering (IPO).
There are two main types of the stock, Common stock and preferred stock. Common
stock represents ownership in a company and a portion of profits (dividends). Investor also have
voting rights (one vote per share) to elect the board members who oversee the major decision
made by management. In the long term, common stock by means of capital growth, yield higher
rewards than other form of investment securities. Common stockholders expect to be
compensated with adequate dividends and, ultimately, capital gains. This higher return comes at
a cost, as common stock entails the most risk. If a company goes bankrupt and liquidities, the
common stockholders will not receive money until the creditors, bondholders and preferred
shareholders are paid.
Preferred stocks give its holder certain privileges that make them senior to common
stockholders. Preferred stockholder are promised a fix periodic dividend, which is stated as
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 22/34
MM 5009 – FINANCE STOCK ANALYSIS
21SUFIAN (29112017) MBA X-47
percentage or as a dollar amount. The dividend is specified on whether the preferred stock has
par-value. Some people consider preferred stock considered as quasi debt, because much like
interest on debt, it specifies a fix periodic payment (dividend).
MPPA STOCK MARKET SNAPSHOT
INVESTMENT PARAMETER
Target price adjustment is based on the following considerations:
- Growing modern retail industry, supported by growing economy which is predicted to
reach 6.2% in 2012, increasing income per capita to over USD 4,000 and large
population of 257 million. In Indonesia, potential increasing income per capita of middle-
class society, which accounted for around 40% of Indonesian people, has become the
main driver of modern retail industry growth, of which MPPA is one of them.
- Hypermart contributes as much of 94.6% of MPPA’s revenue in 2011. Comparing to
MPPA’s gross revenue of 9.3 trillion in 2011 with its gross revenue excluding from
Matahari Department Stores (MDS) in 2010 of IDR 8.05 trillion, MPPA still manage to
grow by 15% YoY. MPPA recorded net revenue of IDR 8.9 trillion in 2011, as MPA’s
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 23/34
MM 5009 – FINANCE STOCK ANALYSIS
22SUFIAN (29112017) MBA X-47
actual gross revenue grew by 15% YoY, but is operating profit was able to grew by
39.1% YoY.
- During January – September 2012 period, MPPA booked 22.1% YoY growth of revenue,
while its operating and net profit margin rose to 1.45% and 1.92% higher than 1.09% and
1.15% in September 2011 period.
- Risk free rate, equity premium, and beta assumption are 5.40%, 7.80%, and 0.94x
respectively.
In 2010, MPPA divested its Matahari Department Store business, to focus on food
business. From such action, MPPA’s net revenue dropped from IDR 10.3 trillion in 2009 to just
IDR 8.6 trillion in 2010. However, afterwards MPPA booked a significant growth of revenue
(without MDS), as proved by 15% YoY growth in 2011, and significant jump of 22.05% YoY
growth in 9M12. In the bottom line, MPPA’s net income experience robust growth in 9M12, as it
rose by 104% YoY. MPPA’s net margin also improved, as it state 1.92% of net profit margin in
9M12, better than 2011 period of 1.18% and 1.15% in 9M11 periods.
STOCK VALUATION
METHODOLOGY
Using assumption from market data in July 15, 2013:
Risk free rate (%) 5.40
Risk premium (%) 7.80
Beta (x) 0.94
Cost of equity (%) 12.73
Marginal tax rate (%) 25.00
Interest bearing debt to equity ratio (%) 41.10
WACC (%) 15.25Source:http://www.miniwebtool.com/wacc-calculator/?n1=12.73&n2=3845724&n3=25.09&n4=2715926&n5=25
The Gordon growth model, named after its inventor Myron Gordon, A model for
determining the intrinsic value of a stock, based on a future series of dividends that grow at a
constant rate. Given a dividend per share that is payable in one year, and the assumption that the
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 24/34
MM 5009 – FINANCE STOCK ANALYSIS
23SUFIAN (29112017) MBA X-47
dividend grows at a constant rate in perpetuity, the model solves for the present value of the
infinite series of future dividends.
Where:
D = Expected dividend per share one year from now
k = required rate of return for equity investor
G = Growth rate in dividends (in perpetuity)
R EQUIRED R ATE ON EQUITY
There are two basic inputs to the model - expected dividends and the cost on equity. To
obtain the expected dividends, we make assumptions about expected future growth rates in
earnings and payout ratios. The required rate of return on a stock is determined by its riskiness,
measured differently in different models - the market beta in the CAPM, and the factor betas in
the arbitrage and multi-factor models. The model is flexible enough to allow for time-varying
discount rates, where the time variation is caused by expected changes in interest rates or risk
across time. From the formula, we can calculate the Required Return of MPPA Stock such as:
Source: http://people.stern.nyu.edu/adamodar/New_Home_Page/datafile/totalbeta.html
Beta = 0,94
r = Risk - free Rate + Beta (Risk Premium)
r = 5.4% + 0,94 (7.8%) = 12.73 %
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 25/34
MM 5009 – FINANCE STOCK ANALYSIS
24SUFIAN (29112017) MBA X-47
GROWTH
Investors pay a price premium when they acquire companies with high growth potential.
This premium takes the form of higher price-earnings or price-book value ratios. While no one
will contest the proposition that growth is valuable, it is possible to pay too much for growth. In
fact, empirical studies that show low price-earnings ratio stocks earning return premiums over
high price-earnings ratio stocks in the long term supports the notion that investors overpay for
growth. Actual prices paid for growth. For the MPPA stock we can calculate the growth by:
VALUE OF EQUITY
Value of equity is one of the tools to calculate the real value of Company stock. Value of
equity consists of dividend per share, cost of equity and expected growth rate. The calculation of
value of Equity of MPPA Stock is:
g = retention ratio x ROE
g = (1 – DPO) x ROE
g = (1 –
0,1247) x 4.65%
= 0.0407 or 4.07 %
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 26/34
MM 5009 – FINANCE STOCK ANALYSIS
25SUFIAN (29112017) MBA X-47
VALUE ESTIMATION
Real Stock pricesStock market prices
15 July 2013Result
Rp. 2,235 Rp. 2,300 – 2,375 Over valued
From the market on July 15, 2013, Matahari Putra Prima Tbk is now traded for IDR 2,300 (low)
up to IDR 2,375 (high) on Jakarta Stock Exchange of Indonesia. So the stock that Telkom offer
is overvalued. If the stock price is undervalued, investor should buy it, but if the company stock
is overvalued means the investor should sell the stock and gain the profit.
Vo = 186 x (1 + 4.07%) = 186 x 1.0407
(12.73% - 4.07%) = 8.66 %
= 193.57
0.0866
= Rp. 2,235
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 27/34
MM 5009 – FINANCE STOCK ANALYSIS
26SUFIAN (29112017) MBA X-47
References:
http://www.tradergods.com/stock/stockdetail.aspx?stock=MPPA
http://en.wikipedia.org/wiki/Economy_of_Indonesia
http://www.indexmundi.com/indonesia/economy_profile.html
http://www.tradingeconomics.com/indonesia
http://www.mataharigroup.co.id
http://www.bi.go.id/sdds/default.asp#FinancialSector
http://markets.ft.com/research/Markets/Tearsheets/Business-profile?s=MPPA:JKT
http://investing.businessweek.com/research/stocks/financials/ratios.asp?ticker=MPPA:IJ
http://www.ipotnews.com/index.php?level2=&level3=&level4=&id=2165160&popular =
http://finance.yahoo.com/q?s=MPPA.JK
http://www.reuters.com/finance/stocks/overview?symbol=MPPA.JK
http://pages.stern.nyu.edu/~adamodar/
http://quotes.wsj.com/ID/MPPA
http://investing.money.msn.com/investments/stock-price/?symbol=ID%3AMPPA
http://www.bloomberg.com/quote/MPPA:IJ
http://idsaham.com/saham-MPPA-informasi-saham-analisa-saham.html
http://www.macroaxis.com/invest/ratio/MPPA.JK--Last_Dividend_Paid
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 28/34
MM 5009 – FINANCE STOCK ANALYSIS
27SUFIAN (29112017) MBA X-47
EXHIBIT 1 – INCOME STATEMENT
PT MATAHARI PUTRA PRIMA TBK
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 29/34
MM 5009 – FINANCE STOCK ANALYSIS
28SUFIAN (29112017) MBA X-47
EXHIBIT 2 – BALANCE SHEETPT MATAHARI PUTRA PRIMA TBK
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 30/34
MM 5009 – FINANCE STOCK ANALYSIS
29SUFIAN (29112017) MBA X-47
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 31/34
MM 5009 – FINANCE STOCK ANALYSIS
30SUFIAN (29112017) MBA X-47
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 32/34
MM 5009 – FINANCE STOCK ANALYSIS
31SUFIAN (29112017) MBA X-47
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 33/34
MM 5009 – FINANCE STOCK ANALYSIS
32SUFIAN (29112017) MBA X-47
EXHIBIT 3 – CASH FLOWPT MATAHARI PUTRA PRIMA TBK (MPPA)
7/29/2019 MPPA (Stock Analysis)
http://slidepdf.com/reader/full/mppa-stock-analysis 34/34
MM 5009 – FINANCE STOCK ANALYSIS
Financing Activities