Oil and Gas Companies and Their Fair Value: Evidence from Indonesia Stock Exchange

Nur Hakim Fibrianto, Riko Hendrawan

2019

Abstract

State revenues in crude petroleum and natural gas production sub-sector are still high, so the public still wants to invest its shares. There needs to be a valuation analysis in estimating the fair price of shares based on fundamental data. The purpose of this study was to analyze the valuation of shares in oil and gas companies MEDC, ENRG, and ELSA, using the DCF-FCFF method and control it using the RV PER-PBV method. In this study, there are three scenarios: pessimistic, moderate and optimistic using historical data from 2013-2017 as the basis for projections for 2018-2022. Comparing the results of the market share fair value on January 2, 2019, the DCF-FCFF method concluded that the condition was pessimistic: MEDC-ENRG (overvalued), ELSA (undervalued); moderate: MEDC-ENRG-ELSA (undervalued); optimistic: MEDC-ENRG-ELSA (undervalued). The RV PER-PBV method shows that the value of MEDC-ENRG-ELSA is still within the IDX market range Q1-2018. Recommendations for investors are to buy stocks in undervalued conditions and sell them in overvalued conditions, while for further researchers research can be done in other sectors besides the oil and gas sector and more assumption data are used for the validity of data analysis.

Paper Citation

in Harvard Style

Fibrianto N. and Hendrawan R. (2019). Oil and Gas Companies and Their Fair Value: Evidence from Indonesia Stock Exchange.In Proceedings of the 2nd International Conference on Inclusive Business in the Changing World - Volume 1: ICIB, ISBN 978-989-758-408-4, pages 106-116. DOI: 10.5220/0008428001060116

in Bibtex Style

@conference{icib19,
author={Nur Hakim Fibrianto and Riko Hendrawan},
title={Oil and Gas Companies and Their Fair Value: Evidence from Indonesia Stock Exchange},
booktitle={Proceedings of the 2nd International Conference on Inclusive Business in the Changing World - Volume 1: ICIB,},
year={2019},
pages={106-116},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0008428001060116},
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 - Oil and Gas Companies and Their Fair Value: Evidence from Indonesia Stock Exchange
SN - 978-989-758-408-4
AU - Fibrianto N.
AU - Hendrawan R.
PY - 2019
SP - 106
EP - 116
DO - 10.5220/0008428001060116