The Valuation of Textile And Garment Companies : Evidence From Indonesia Stock Exchange
Puspoaji Wartaputra Satriawana(a), Riko Hendrawan(b)
Telkom University
Abstract
This study is aimed to estimate the fair value of textile and garment companies share.. The companies being studied are listed in Indonesia Stock Exchange, using data from 2013 – 2017 as the basis for 2018-2022 projection. The methodology for company valuation was The Dividend Discounted Model and Relative Valuation. Relative Valuation was applied using the combination of Price to Earnings Ratio and Price to Book Value. Using these methods, three scenarios were developed, namely; pessimistic to represent industry average conditions, moderate to represent most likely conditions and lastly, optimistic scenario to represent the conditions above industrial growth. The results showed that using the Dividend Discounted Model method, the fair value of RICY, TRIS, PBRX and SRIL shares in the pessimistic, moderate and optimistic scenario was overvalued. Except RICY, in the optimistic scenario was undervalued. The RV PER-PBV method shows that the value of RICY-TRIS-PBRX-SRIL is still within the IDX market range Q1-2018. The recommendation for investors is to buy shares under undervalued conditions and sell them in overvalued conditions. The result can be further validated by taking examples from different industry sectors.
Keywords: Fair Value, Textile and Garment Companies, Valuation
Topic: Financial Technology