Financial Performance Analysis and Stock Valuation of Coal Mining Company during Covid19 Pandemic (Case Study: Adaro Energy Indonesia)

Abstract

Coal is one of the commodity that is mined and consumed a lot in Indonesia and also the world. The thermal coal is needed for the electricity meanwhile metallurgical coal is needed in the steel making industry. Towards mid-2021, the coal price has escalated to all time high. It affects stock price performance of several coal mining companies in Indonesia. From having a bad downturn in 2020 due to Covid-19 and less energy demand, coal starts to gain more demand in 2021 in line with more industrial activities and economy recovery. In Indonesia, one of the coal mining company with one of the largest reserve and largest market capitalization is Adaro Energy. The purpose of this research is to analyse the intrinsic value of Adaro Energy to help investors gain insight especially after the world economy is recovering after two years in the pandemic crisis. The financial performance of Adaro Indonesia will be projected for the upcoming five years. From the calculation using Discounted Cash Flow, it is found that the intrinsic value is IDR3, 263.56. Considering the market value of Adaro in the closing date of 2021 is IDR2, 250, thus the expected rates of return is 45% or IDR1, 014. Form the calculation using Dividend Discounted Model, the intrinsic value is IDR3, 494.05 (55, 3% return); using PBV, the intrinsic value is IDR3, 513 (56% return); using EV/EBITDA, the intrinsic value is IDR2, 605 (16% return).