Valuation of PT Pertamina (Persero) Post Restructuring

  • Rico Milza Institut Teknologi Bandung
  • Raden Aswin Rahadi Institut Teknologi Bandung

Abstract

This research aims to assess the valuation of Pertamina post restructuring using the Sum of The Part (SOTP) valuation method of each sub-holdings and subsidiaries. Internal and external analysis of each sub-holdings and subsidiaries used as the input of the valuation process. Intrinsic valuation method using FCFF and relative valuation method using EV/EBITDA and P/BV used to calculate the implied equity value of each sub-holdings and subsidiaries. FCFF valuation results of each sub-holdings and subsidiaries post restructuring revealed the total implied equity value of USD 75,23 billion. The total relative valuation result of each sub-holdings and subsidiaries is USD 76,04 billion. Average total implied equity value using both methods is USD 75,65 billion. After net cash and debt adjustment of USD -9,79 billion, the average total implied equity value for PT Pertamina (Persero) is USD 65,85 billion, much lower than shareholder’s aspirations of USD 100 billion. The total implied equity value can reach USD 100,9 billion in the optimistic scenario and becomes USD 36,06 billion in the pessimistic scenario. Sensitivity analysis of valuation variables conclude that ICP is the most sensitive variable to PHE as the major contributor for Pertamina valuation. Majority of other sub-holdings and subsidiaries' most sensitive variable is cost of revenue.

References

Chlomou, G., & Demirakos, E. (2020). How do financial analysts implement the Sum-of-the-Parts (SOTP) valuation framework? International Review of Financial Analysis, 70, 101514. https://doi.org/10.1016/j.irfa.2020.101514
Damodaran, A. (2012). Investment Valuation: Tools and Techniques for Determining the Value of any Asset, University Edition (3rd ed.). Wiley.
Damodaran, A. (2012b). The Little Book of Valuation: How to Value a Company, Pick a Stock, and Profit. Wiley.
Damodaran, A. (2018). Dark Side of Valuation, The: Valuing Young, Distressed, and Complex Businesses (3rd ed.). Pearson FT Press.
Damodaran, A. (2023). Beta Emerging Market. https://pages.stern.nyu.edu/~adamodar/ New_Home_Page/datacurrent.html#multiples
Damodaran, A. (2023). Valuation Multiples Emerging Market. https://pages.stern.nyu.edu/ ~adamodar/New_Home_Page/datacurrent.html#multiples
Imam, S., Barker, R., & Clubb, C. (2008b). The Use of Valuation Models by UK Investment Analysts. European Accounting Review, 17(3), 503–535. https://doi.org/10.1080/ 09638180802016650
Michael E. Porter. (2008). The five competitive forces that shape strategy. Harvard Business Review, 86(1), 78–93, 137.
Mihalik, S., Bernardini, J., & Ewers, B. (2022, August 10). Future Operating Model for National Oil Companies. BCG Global. https://www.bcg.com/publications/ 2022/national-oil-companies-operating-model-transformation
Miles, M. B., Huberman, M. A., & Saldana, J. (2019). Qualitative Data Analysis: A Methods Sourcebook (4th ed.). SAGE Publications, Inc.
Mohammed Hokroh. (2014). An Analysis of the Oil and Gas Industry’s Competitiveness using Porter’s Five Forces Framework. Global Journal of Commerce & Management Perspective, 3(2), 76–82.
Pertamina Annual Report and Financial Statements 2021. Retrieved from Annual Report Pertamina: https://pertamina.com/id/dokumen/laporan-tahunan
Pertamina Hulu Energi Annual Report and Financial Statements 2021. Retrieved from Annual Report Pertamina Hulu Energi: https://phe.pertamina.com/Upload/File/e0e9f2fd-23f8-48a8-b96f-8fa815e78f77ARPHE20211Julyblurred.pdf
Kilang Pertamina International Annual Report and Financial Statements 2021. Retrieved from Annual Report Kilang Pertamina International: https://kpi.pertamina.com /File?id=4e0d75be-98ba-498a-8f97-0cc5a42d6159.pdf
Pertamina Gas Negara Annual Report and Financial Statements 2021. Retrieved from Annual Report Pertamina Gas Negara: https://ir.pgn.co.id/AssetFiles/Financial/Annual Report/laporan_tahunan_2021.pdf
Pertamina Power Indonesia Annual Report and Financial Statements 2021. Retrieved from Annual Report Pertamina Gas Negara: https://pertaminapower.com/cfind/source/ files/ar%20ppi%202021%20110722%20final.pdf
Pertamina Patra Niaga Annual Report and Financial Statements 2021. Retrieved from Annual Report Pertamina Patra Niaga: https://pertaminapatraniaga.com/corporate-governance
Pertamina International Shipping Annual Report and Financial Statements 2021. Retrieved from Annual Report Pertamina Patra Niaga: https://pertamina-pis.com/laporan-tahunan
Pertamina Pedeve Indonesia Annual Report and Financial Statements 2021. Retrieved from Annual Report Pedeve Indonesia: https://pdv.co.id/home/laporantahunan
PT Asuransi Tugu Pratama Indonesia Tbk Annual Report and Financial Statements 2021. Retrieved from Annual Report PT Asuransi Tugu Pratama Indonesia Tbk: https://tugu.com/investor-relations/laporan-tahunan
Pelita Air Services Annual Report and Financial Statements 2021. Retrieved from Annual Report Pelita Air Services: https://corporate.pelita-air.com/web/annual
Pertamina Training & Consulting Annual Report and Financial Statements 2021. Retrieved from Annual Report Pertamina Training & Consulting: https://www.pertamina-ptc.com/assets/uploads/laporan_tahunan_pdf/upload_file_tahunan-40.pdf
Patra Jasa Annual Report and Financial Statements 2021. Retrieved from Annual Report Patra Jasa: https://patra-jasa.com/id/tentang-kami/laporan-tahunan/
Pertamina Bina Medika IHC Annual Report and Financial Statements 2021. Retrieved from Annual Report Pertamina Bina Medika IHC: https://www.pertamedika.co.id/ uploads/files/annual_report/annual_2021.pdf
Petitt, B. S., & Ferris, K. R. (2013). Valuation for Mergers and Acquisitions (2nd ed.). Ft Pr.
Ravitch, S. M., & Riggan, M. J. (2016). Reason & Rigor: How Conceptual Frameworks Guide Research (Second). SAGE Publications, Inc.
Rothaermel, F. (2016). Strategic Management (3rd ed.). McGraw Hill.
Sum-of-the-Parts Valuation (SOTP) Meaning, Formula, Example. (2020, March 31). Investopedia. https://www.investopedia.com/terms/s/sumofpartsvaluation.asp
Zikmund, B. G. B. W. J. (2022). Business Research Methods. Cengage India.
Published
2023-03-01
How to Cite
MILZA, Rico; RAHADI, Raden Aswin. Valuation of PT Pertamina (Persero) Post Restructuring. Asian Journal of Research in Business and Management, [S.l.], v. 5, n. 1, p. 158-173, mar. 2023. Available at: <https://myjms.mohe.gov.my/index.php/ajrbm/article/view/21242>. Date accessed: 21 feb. 2024.
Section
Articles