Share Valuation of Indonesian Regional Development Bank using Free Cash Flow to Equity and Relative Valuation Methods

Riko Hendrawan, Niken Susilowati, Farida T. Kristanti

2019

Abstract

The Indonesian Regional Development Banks established to help economic equality for all regions in Indonesia, and most of them face limited capital. The purpose of this research is to determine the fair value of Listed Regional Development Banks in IDX in 2018, using Discounted Cash Flow with FCFE approach and validate the result using relative valuation methods with PER and PBV approach. The sample of this research are BJBR, BJTM, and BEKS. Financial historical data from the last five years, since 2013 to 2017 as a basic reference for the projection from 2018 to 2022, involving pessimistic, moderate and optimistic scenario and the value is compared with market price on January 2, 2018. Results of this research indicate that using FCFE valuation, BJBR and BJTM has overvalued in all scenarios, while for BEKS has undervalued in all scenarios. In relative valuation method within PER and PBV approach showed PER and PBV of all sample this research is within the industry range means the result of the calculation is proper, except PBV for BEKS in the moderate and optimistic scenario but not significant. The conclusion of this research is to recommend selling shares BJBR and BJTM, and buying BEKS shares.

Paper Citation

in Harvard Style

Hendrawan R., Susilowati N. and Kristanti F. (2019). Share Valuation of Indonesian Regional Development Bank using Free Cash Flow to Equity and Relative Valuation Methods.In Proceedings of the 2nd International Conference on Inclusive Business in the Changing World - Volume 1: ICIB, ISBN 978-989-758-408-4, pages 94-105. DOI: 10.5220/0008427900940105

in Bibtex Style

@conference{icib19,
author={Riko Hendrawan and Niken Susilowati and Farida T. Kristanti},
title={Share Valuation of Indonesian Regional Development Bank using Free Cash Flow to Equity and Relative Valuation Methods},
booktitle={Proceedings of the 2nd International Conference on Inclusive Business in the Changing World - Volume 1: ICIB,},
year={2019},
pages={94-105},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0008427900940105},
isbn={978-989-758-408-4},
}

in EndNote Style

TY - CONF

JO - Proceedings of the 2nd International Conference on Inclusive Business in the Changing World - Volume 1: ICIB,
TI - Share Valuation of Indonesian Regional Development Bank using Free Cash Flow to Equity and Relative Valuation Methods
SN - 978-989-758-408-4
AU - Hendrawan R.
AU - Susilowati N.
AU - Kristanti F.
PY - 2019
SP - 94
EP - 105
DO - 10.5220/0008427900940105