Stock Valuation of Indonesia Property Company using Blended Valuation Method (Case Study of PT. Pakuwon Jati, Tbk)

Abstract

After Indonesia got hit by a pandemic in 2020, Indonesia’s economy managed to recover in 2021. However, the property industry in Indonesia was experiencing a negative impact due to increasing interest rates. The increasing interest rates means that people will get higher costs if they want to borrow money to buy property. Moreover, people became more hesitant to buy or invest in property because government-borne value added tax incentives (PPN DTP) ended in September 2022. However, PT Pakuwon Jati Tbk. (PWON) seems to be less impacted because PWON have recurring income and non-recurring income as their source of income. Recurring income came from space rental, service apartment, hotel, etc. Non-recurring income came from sale of condominiums and offices and sale of land and buildings. The less restriction on people's mobility to do activities outside their house and the growth of GDP caused by household consumption indicates that PWON’s recurring income will be less impacted negatively by the increasing inflation rate. The possibility of this situation might affect the company’s stock performance since it would result in lower profitability for the company. To help investors to decide in this situation, the intrinsic value of the company stock is required. Therefore, it is important to find the intrinsic value. The intrinsic value of PWON was derived by using a blended valuation method. The author gave weight on the various valuation models that were used. From the method, the intrinsic value of PWON was IDR 440 per share.