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Calculate the financial ratios of all 288 companies from 466 companies listed on Indonesia Stock Exchange by June 6, 2013, and compare each company's ratio with its industry performance. This is just a basic step of due diligence process of stock fundamental analysis. This presentation slide is just a brief introduction of my thesis project. The complete full version of the research is in word document format, not included in this presentation.
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FUNDAMENTAL ANALYSIS OF STOCK USING FINANCIAL RATIOS OF
COMPANIES LISTED ON THE INDONESIA STOCK EXCHANGE
学生 : Nohan Pradipta （曾汉琦） 20125216012
指导教师 : 崔维军 先生
Main idea of this research :
• The researcher want to invest directly in stock market in Indonesia after graduating from University. (long term investment)
• The idea is to own a business, we don’t always have to start from the ground up. Investment in equities / stock market is one of many ways in acquiring businesses.
I hope my research can give the big picture of financial condition of all companies listed on the Indonesia Stock Exchange using ratio analysis.
So that investors who want to invest in Indonesia stock market can get a
comprehensive information of the companies’ financial ratios and hopefully can help investors in
making investment decision of which company’s stock they want to buy or
make a further research about the company.
The Example of Real and Identical, but Commercial Research
Facts about Indonesia :
• The 4th largest population in the world (around 250 million people)• The 15th biggest economy in the world with more than 1.2 trillion dollars of GDP in 2012• In 2030, Indonesia is projected to become the 7th largest economy in the world (McKinsey Global Institute)• By 2020, middle income class in Indonesia will double to roughly 141 million people.(The Boston Consulting Group)• Currently, more than 50% of Indonesia’s population is under the age of 30 years old.
Research Scope :
• Only companies listed on the Indonesia Stock Exchange (IDX)• Only uses the financial ratios to conduct fundamental analysis, without considering the management factor, good corporate governance, etc• Only compare the result of financial ratio analysis without making any subjective suggestion about stock picking decision• In order to make a fair comparison, we use the stock prices from the closing prices of the same date. For now, we use 6th June 2013.• We only analyze all the companies listed on the IDX by 6th June 2013 which provide their annual reports or financial reports to the public in their website, or from any other sources if available.
Research Objectives
• Analyze the financial report and calculate the financial ratios of companies listed on the Indonesia Stock Exchange.
• Compare the financial ratios of each company with its past five years performance if available. (2008-2012)
• Comparing the financial ratios between companies in the same or similar business model.
Research Benefits
• To give a big picture of financial condition of companies listed on the IDX by looking at the financial ratios
• As a reference for prospective investors who haven’t conducted thorough financial ratio analysis as a basic fundamental analysis
• Prospective investors can take advantage of this research if they want to invest in IDX as an objective reference, then that they can make their own decision which stock of company they should buy.
Research Methodology
Figure 1. Bottom-Up Model
The methodology of this research is using Bottom-Up approach.
The view of this approach is that an individual company can perform well even though its sector or industry is performing badly.
Research Methodology (cont.)
This is the opposite of “Top-Down investing”. Top-Down approach begins with an analysis of the broader economy. It’s a method of analysis that involves looking at the “big picture” first, and then analyzing the details of smaller components as depicted in Figure 2.
Figure 2. Top-Down Model
Research Methodology (cont.)
In this research, we use financial ratio analysis which is determined by looking into each company financial report. If it is available, we analyze the annual report of the last five years in order to get a broader picture of the company financial condition.
In this research, we use 22 financial ratios which are divided into 5 types:1.Liquidity ratio2.Leverage ratio3.Activity ratio4.Profitability ratio5.Market value ratio
Research Methodology (cont.)
• Liquidity ratios : Current ratio Quick ratio Cash ratio Operating Cash Flow to Current Liabilities (OCFCL)
• Leverage ratio : Debt ratio Debt/Equity ratio
Research Methodology (cont.)
• Activity ratios : Asset turnover Inventory turnover
• Profitability ratios : Gross profit margin Operating profit margin Net profit margin Return on Asset Return on Equity EPS
Research Methodology (cont.)
• Market value ratios : P/E Dividend payout ratio Dividend yield Price/Cash flow ratio PBV Price/Sales ratio EV/EBITDA (Enterprise Multiple) EV/Sales
Systematics of Writing
Title PageAbstractTable of ContentsList of TablesList of FiguresChapter 1 : IntroductionChapter 2 : Literature ReviewChapter 3 : MethodologyChapter 4 : Analysis and Research ResultsChapter 5 : Conclusion and RecommendationReferences
Chapter 1 : Introduction1.1 Background1.2 Research Scope1.3 Objectives and Benefits1.4 Methodology1.5 Systematics of the Writing
Systematics of Writing
Chapter 2 : Literature Review2.1 Fundamental Analysis
2.1.1 Qualitative factors2.1.2 Quantitative factors
2.2 Financial Ratio Analysis2.2.1 Liquidity Ratio
a. Current Ratiob. Quick Ratioc. …..
(all the 22 Financial Ratios)
Systematics of Writing
Chapter 3 : Methodology3.1 Data Sources
Systematics of Writing
Chapter 3 : Methodology3.1 Data Sources
Systematics of Writing
Chapter 3 : Methodology3.2 Research Population
→ All the companies listed on the IDX by 6th June 2013. Total 466 companies – (minus) 178 companies = 288 companies
→ Divided into 36 different business sectors, based on each company’s core business
3.3 Method of Analysis Result Presentation
Systematics of Writing
Financial Ratio 2008 2009 2010 2011 2012 2013
Liquidity
Current ratio
Quick ratioCash ratio
OCFCL ratio
LeverageDebt ratio
Debt/Equity ratio
ActivityAsset turnover
Inventory turnover
Profitability
Gross profit margin
Operating profit margin
Net profit margin
Return on Asset
Return on Equity
EPS
Market Valuation
P/E
Dividend payout
Dividend yield
Price/Cash flow
PBVPrice/SalesEnterprise MultipleEV/Sales
No.
Com
pan
y
Liquidity Leverage Activity Profitability Market Valuation
Cu
rrent
Qu
ick
Cash
OC
FC
L
Deb
t ratio
Deb
t/Eq
uity
Asset tu
rnover
Inven
tory turn
over
Gross p
rofit margin
Op
erating p
rofit margin
Net p
rofit margin
RO
A
RO
E
EP
S
P/E
Divid
end
payou
t
Divid
end
yield
Price/C
ash flow
PB
V
Price/S
ales
En
terprise M
ultip
le
EV
/Sales
1Company
A
2Company
B
3Company
C
…
Comparison of companies in the same business sector:
Systematics of Writing
Chapter 4 : Analysis and Research Results4.1 Financial Ratios Comparison with Company’s Past Performance4.2 Financial Ratios Comparison of Companies in the Same Business Sector
Chapter 5 : Conclusion and Recommendation
5.1 Conclusion5.2 Recommendation
Financial Ratios Comparison with Company’s Past Performance
Example
Financial Ratio 2008 2009 2010 2011 2012 2013
Liquidity
Current ratio 1.944 1.825 1.931 1.309 0.685
Quick ratio 1.15 1.009 1.250 0.763 0.185Cash ratio 0.853 0.839 1.168 0.582 0.087
OCFCL ratio 2.054 2.113 2.775 2.195 1.003
LeverageDebt ratio 0.209 0.177 0.179 0.174 0.246
Debt/Equity ratio 0.264 0.216 0.219 0.211 0.326
ActivityAsset turnover 1.374 1.053 1.08 1.134 1.022
Inventory turnover
7.292 6.213 8.478 9.806 7.139
Profitability
Gross profit margin
0.466 0.417 0.408 0.365 0.376
Operating profit margin
0.413 0.351 0.339 0.309 0.304
Net profit margin 0.322 0.223 0.228 0.232 0.218
Return on Asset 0.443 0.235 0.246 0.263 0.222
Return on Equity 0.570 0.291 0.300 0.314 0.283
EPS 1670 1054 1280 1586 1,600
Market Valuation
P/E 5.865 21.584 20.468 13.682 12.312 12.059
Dividend payout 0.601 0.385 0.532 0.613 0.600
Dividend yield 0.102 0.017 0.026 0.044 0.050
Price/Cash flow 7.393 18.049 14.001 10.805 11.888 11.646
PBV 3.088 5.964 5.912 4.226 3.387 3.318Price/Sales 1.890 4.825 4.665 3.172 2.682 2.628Enterprise Multiple
4.026 14.335 13.967 10.535 9.602 9.424
EV/Sales 1.951 4.900 4.703 3.259 2.927 2.872
AALI (Astra Agro Lestari Tbk)
Stock price : IDR 19,300IPO price : IDR 1,550 (9th December 1997)Number of shares : 1,574,745,000
Percentage of ownership:•PT Astra International Tbk : 79.68%•Public : 20.32%
Financial Ratios Comparison of Companies in the Same Business Sector
Example
No.
Com
pan
y’s Secu
rity Cod
e
Liquidity Leverage Activity Profitability Market Valuation
Cu
rrent
Qu
ick
Cash
OC
FC
L
Deb
t ratio
Deb
t/Eq
uity
Asset tu
rnover
Inven
tory turn
over
Gross p
rofit margin
Op
erating p
rofit margin
Net p
rofit margin
RO
A
RO
E
EP
S
P/E
Divid
end
payou
t
Divid
end
yield
Price/C
ash flow
PB
V
Price/S
ales
En
terprise M
ultip
le
EV
/Sales
1 AALI 0.685 0.185 0.087 1.003 0.246 0.326 1.022 7.139 0.376 0.304 0.218 0.2220.28
31,600
12.059
0.600 0.05011.64
63.318 2.628 9.424 2.872
2 ANJT 1.956 1.602 1.371 0.496 0.179 0.219 0.282 8.296 0.463 0.370 0.598 0.1460.23
1287 4.704 3.062
16.205
1.393 2.812 7.504 2.781
3 BISI 8.077 0.973 0.781 (0.476) 0.131 0.151 0.557 0.753 0.449 0.187 0.149 0.0830.09
743
18.604
0.232 0.012(31.198)
1.755 2.7715.26
22.866
4 BWPT 0.651 0.200 0.098 0.266 0.660 1.948 0.222 1.941 0.604 0.442 0.277 0.0610.16
964
15.468
0.187 0.00829.30
02.508 4.248
17.272
7.632
5 GZCO 1.512 1.348 0.933 0.049 0.498 0.992 0.134 8.726 0.388 0.284 0.242 0.0320.06
316 8.375 0.056 0.004
66.248
0.601 1.98318.74
95.329
6JAWA
0.824 0.755 0.541 0.603 0.440 0.787 0.326 0.369 0.291 0.225 0.0730.12
840 8.875 0.240 0.025 5.440 1.069 1.965
10.587
3.088
7 LSIP 3.273 2.392 2.270 1.783 0.168 0.202 0.587 4.990 0.399 0.314 0.264 0.1550.18
4163
11.901
0.613 0.044 9.365 2.128 3.142 9.599 3.017
8 PALM 0.910 0.616 0.566 0.009 0.728 2.686 0.196 8.039 0.237(0.132
)(0.144
)(0.028
)(0.088)
1725.88
20.238 0.008
474.314
2.431 3.618(54.278)
7.183
9 PSDN 1.606 0.375 0.361 0.045 0.399 0.666 2.364 5.888 0.122 0.051 0.019 0.0460.08
317
11.705
0.428 0.03527.46
90.699 0.219 7.217 0.369
10 SGRO 1.108 0.370 0.308 0.481 0.355 0.551 0.791 6.280 0.265 0.162 0.112 0.0890.13
0177
10.677
0.493 0.03510.04
71.393 1.196 9.894 1.612
11 SIMP 1.483 0.845 0.752 0.594 0.394 0.651 0.531 5.579 0.281 0.176 0.109 0.0580.09
695 9.157 0.416 0.034 5.052 0.993 0.993 8.497 1.501
12 SMAR 2.099 0.565 0.338 0.973 0.449 0.817 1.777 7.617 0.237 0.118 0.078 0.1390.26
4749 9.879 0.267 0.030 6.240 2.384 0.772 8.394 0.994
13 TBLA 1.588 0.874 0.375 (0.006) 0.661 1.954 0.806 4.881 0.270 0.081 0.064 0.0510.14
449
10.204
0.377 0.037(279.088)
1.452 0.64917.23
01.408
Financial Ratios Comparison of Companies in the Same Business Sector
Example
Financial Ratios Comparison of Companies in the Same Business Sector
Example
The 22 Financial Ratios
(1)
(2)
(3)
(4)
The 22 Financial Ratios
(5)
(6)
(7)
(8)
The 22 Financial Ratios
(9)
(10)
(11)
(12)
The 22 Financial Ratios
(13)
(14)
(15)
(16)
The 22 Financial Ratios
(17)
(18)
(19)
The 22 Financial Ratios
(20)
(21)
(22)
5.2 RecommendationFrom the results of this analysis, prospective investors can choose which companies they are interested to invest, and also they can do a further research about the management of the companies and the business model prospect in order to ensure that they are buying the right companies.
Neither the technical analysis nor the stock price historical track record can ensure the stock price in the future will perform well, and neither do the fundamental analysis. Fundamental analysis does not guarantee that good and healthy financial performance of a company in these years will also reflect good financial condition of the company in the future. Therefore, we recommend that prospective investors who are interested to invest in stock market to consider about the other factors that will affect the market demand of the industry of each company in the future that will affect the company’s sales, and many other factors that influence the sustainability of the business.
