FUNDAMENTAL ANALYSIS OF STOCK USING
FINANCIAL RATIOS OF COMPANIES LISTED
ON THE INDONESIA STOCK EXCHANGE

指导教师 : 崔维军 先生
学生...
Main idea of this research :
• The researcher want to invest directly in
stock market in Indonesia after graduating
from U...
I hope my research can give the big picture of
financial condition of all companies listed on
the Indonesia Stock Exchange...
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 i...
Research Scope :
• Only companies listed on the Indonesia Stock Exchange
(IDX)
• Only uses the financial ratios to conduct...
Research Objectives
• Analyze the financial report and calculate the financial
ratios of companies listed on the Indonesia...
Research Benefits
• To give a big picture of financial condition of
companies listed on the IDX by looking at the financia...
Research Methodology
The methodology of this research is using Bottom-Up
approach.
The view of this approach is that an in...
Research Methodology (cont.)
This is the opposite of “Top-Down investing”. TopDown approach begins with an analysis of the...
Research Methodology (cont.)
In this research, we use financial ratio analysis which is
determined by looking into each co...
Research Methodology (cont.)
• Liquidity ratios :
 Current ratio
 Quick ratio
 Cash ratio
 Operating Cash Flow to Curr...
Research Methodology (cont.)
• Activity ratios :
 Asset turnover
 Inventory turnover
• Profitability ratios :
 Gross pr...
Research Methodology (cont.)
• Market value ratios :
 P/E
 Dividend payout ratio
 Dividend yield
 Price/Cash flow rati...
Systematics of Writing
Title Page
Abstract
Table of Contents
List of Tables
List of Figures
Chapter 1 : Introduction
Chapt...
Systematics of Writing
Chapter 1 : Introduction
1.1 Background
1.2 Research Scope
1.3 Objectives and Benefits
1.4 Methodol...
Systematics of Writing
Chapter 2 : Literature Review
2.1 Fundamental Analysis
2.1.1 Qualitative factors
2.1.2 Quantitative...
Systematics of Writing
Chapter 3 : Methodology
3.1 Data Sources
Systematics of Writing
Chapter 3 : Methodology
3.1 Data Sources
Systematics of Writing
Chapter 3 : Methodology
3.2 Research Population
→ All the companies listed on the IDX by 6th
June 2...
Financial Ratio

2008

Current ratio
Liquidity

Quick ratio
Cash ratio
OCFCL ratio
Debt ratio

Leverage

Debt/Equity ratio...
Comparison of companies in the same business sector:

EV/Sales
Enterprise Multiple
Price/Sales
PBV
Price/Cash flow
Dividen...
Systematics of Writing
Chapter 4 : Analysis and Research Results
4.1 Financial Ratios Comparison with Company’s
Past Perfo...
Example
 Financial Ratios Comparison with Company’s Past
Performance
Financial Ratio

AALI (Astra Agro Lestari
Tbk)

2009...
Example
 Financial Ratios Comparison of Companies in the
Same Business Sector
Liquidity

0.282 8.296 0.463 0.370 0.598 0....
Example
 Financial Ratios Comparison of Companies in the
Same Business Sector
Example
 Financial Ratios Comparison of Companies in the
Same Business Sector
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 Recommendation
From the results of this analysis, prospective investors can choose
which companies they are interested...
Fundamental Analysis of Stock Using Financial Ratios of Companies Listed on the Indonesia Stock Exchange
Fundamental Analysis of Stock Using Financial Ratios of Companies Listed on the Indonesia Stock Exchange
Fundamental Analysis of Stock Using Financial Ratios of Companies Listed on the Indonesia Stock Exchange
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Fundamental Analysis of Stock Using Financial Ratios of Companies Listed on the Indonesia Stock Exchange

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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

  1. 1. FUNDAMENTAL ANALYSIS OF STOCK USING FINANCIAL RATIOS OF COMPANIES LISTED ON THE INDONESIA STOCK EXCHANGE 指导教师 : 崔维军 先生 学生 : Nohan Pradipta (曾汉琦) 20125216012
  2. 2. 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.
  3. 3. 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.
  4. 4. The Example of Real and Identical, but Commercial Research
  5. 5. 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.
  6. 6. 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 6 th 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.
  7. 7. 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.
  8. 8. 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.
  9. 9. Research Methodology 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. Figure 1. Bottom-Up Model
  10. 10. Research Methodology (cont.) This is the opposite of “Top-Down investing”. TopDown 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
  11. 11. 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 ratio 2.Leverage ratio 3.Activity ratio 4.Profitability ratio 5.Market value ratio
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. Systematics of Writing Title Page Abstract Table of Contents List of Tables List of Figures Chapter 1 : Introduction Chapter 2 : Literature Review Chapter 3 : Methodology Chapter 4 : Analysis and Research Results Chapter 5 : Conclusion and Recommendation References
  16. 16. Systematics of Writing Chapter 1 : Introduction 1.1 Background 1.2 Research Scope 1.3 Objectives and Benefits 1.4 Methodology 1.5 Systematics of the Writing
  17. 17. Systematics of Writing Chapter 2 : Literature Review 2.1 Fundamental Analysis 2.1.1 Qualitative factors 2.1.2 Quantitative factors 2.2 Financial Ratio Analysis 2.2.1 Liquidity Ratio a. Current Ratio b. Quick Ratio c. ….. (all the 22 Financial Ratios)
  18. 18. Systematics of Writing Chapter 3 : Methodology 3.1 Data Sources
  19. 19. Systematics of Writing Chapter 3 : Methodology 3.1 Data Sources
  20. 20. Systematics of Writing Chapter 3 : Methodology 3.2 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
  21. 21. Financial Ratio 2008 Current ratio Liquidity Quick ratio Cash ratio OCFCL ratio Debt ratio Leverage Debt/Equity ratio Asset turnover Activity Inventory turnover Gross profit margin Operating profit margin Profitability Net profit margin Return on Asset Return on Equity EPS P/E Dividend payout Dividend yield Market Valuation Price/Cash flow PBV Price/Sales Enterprise Multiple EV/Sales 2009 2010 2011 2012 2013
  22. 22. Comparison of companies in the same business sector: EV/Sales Enterprise Multiple Price/Sales PBV Price/Cash flow Dividend yield Dividend payout P/E EPS ROE ROA Net profit margin Operating profit margin Gross profit margin Inventory turnover Asset turnover Debt/Equity Debt ratio OCFCL Cash Quick Current Company No. … Company C 3 Company B 2 Company A 1 Market Valuation Profitability Leverage Activity Liquidity
  23. 23. Systematics of Writing Chapter 4 : Analysis and Research Results 4.1 Financial Ratios Comparison with Company’s Past Performance 4.2 Financial Ratios Comparison of Companies in the Same Business Sector Chapter 5 : Conclusion and Recommendation 5.1 Conclusion 5.2 Recommendation
  24. 24. Example  Financial Ratios Comparison with Company’s Past Performance Financial Ratio AALI (Astra Agro Lestari Tbk) 2009 2010 2011 2012 Current ratio 1.944 1.825 1.931 1.309 Quick ratio Cash ratio 1.15 0.853 1.009 0.839 1.250 1.168 0.763 0.582 0.185 0.087 2.054 2.113 2.775 2.195 2013 0.685 OCFCL ratio Liquidity 2008 1.003 Percentage of ownership: •PT Astra International Tbk : 79.68% •Public : 20.32% 0.174 0.246 0.219 0.211 0.326 1.374 1.053 1.08 1.134 1.022 Inventory turnover 7.292 6.213 8.478 9.806 7.139 0.466 0.417 0.408 0.365 0.376 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 P/E 1670 5.865 1054 21.584 1280 20.468 1586 13.682 1,600 12.312 Dividend payout Market Valuation 0.179 0.216 Operating profit margin Profitability 0.177 0.264 0.601 0.385 0.532 0.613 0.600 Dividend yield Stock price : IDR 19,300 IPO price : IDR 1,550 (9th December 1997) Number of shares : 1,574,745,000 0.209 Gross profit margin Activity Debt ratio Debt/Equity ratio Asset turnover Leverage 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 Price/Sales Enterprise Multiple EV/Sales 3.088 1.890 5.964 4.825 5.912 4.665 4.226 3.172 3.387 2.682 3.318 2.628 4.026 14.335 13.967 10.535 9.602 9.424 1.951 4.900 4.703 3.259 2.927 2.872 12.059
  25. 25. Example  Financial Ratios Comparison of Companies in the Same Business Sector Liquidity 0.282 8.296 0.463 0.370 0.598 0.146 BISI 8.077 0.973 0.781 (0.476) 0.131 0.151 0.557 0.753 0.449 0.187 0.149 0.083 BWPT 0.651 0.200 0.098 0.266 0.660 1.948 0.222 1.941 0.604 0.442 0.277 0.061 GZCO 1.512 1.348 0.933 0.049 0.498 0.992 0.134 8.726 0.388 0.284 0.242 0.032 0.824 0.755 0.541 0.603 0.440 0.787 0.326 LSIP 3.273 2.392 2.270 1.783 0.168 0.202 0.587 4.990 0.399 0.314 0.264 0.155 PALM 0.910 0.616 0.566 0.009 0.728 2.686 0.196 8.039 0.237 PSDN 1.606 0.375 0.361 0.045 0.399 0.666 2.364 5.888 0.122 0.051 0.019 0.046 SGRO 1.108 0.370 0.308 0.481 0.355 0.551 0.791 6.280 0.265 0.162 0.112 0.089 SIMP 1.483 0.845 0.752 0.594 0.394 0.651 0.531 5.579 0.281 0.176 0.109 0.058 SMAR 2.099 0.565 0.338 0.973 0.449 0.817 1.777 7.617 0.237 0.118 0.078 0.139 JAWA 0.369 0.291 0.225 0.073 (0.132 (0.144 (0.028 ) ) ) EV/Sales 0.219 Enterprise Multiple 0.179 Price/Sales 1.956 1.602 1.371 0.496 PBV ANJT Price/Cash flow 1.022 7.139 0.376 0.304 0.218 0.222 Dividend yield 0.326 Dividend payout 0.246 P/E 0.685 0.185 0.087 1.003 EPS AALI Market Valuation ROE ROA Net profit margin 11 Operating profit margin 10 Profitability Gross profit margin 9 Inventory turnover 8 Activity Asset turnover 7 Debt/Equity 6 Debt ratio 5 OCFCL 4 Cash 3 Quick 2 Current Company’s Security Code No. 1 Leverage 0.28 12.05 11.64 1,600 0.600 0.050 3.318 2.628 9.424 2.872 3 9 6 0.23 16.20 287 4.704 3.062 1.393 2.812 7.504 2.781 1 5 0.09 18.60 (31.1 15.26 43 0.232 0.012 1.755 2.77 2.866 7 4 98) 2 0.16 15.46 29.30 17.27 64 0.187 0.008 2.508 4.248 7.632 9 8 0 2 0.06 66.24 18.74 16 8.375 0.056 0.004 0.601 1.983 5.329 3 8 9 0.12 10.58 40 8.875 0.240 0.025 5.440 1.069 1.965 3.088 8 7 0.18 11.90 163 0.613 0.044 9.365 2.128 3.142 9.599 3.017 4 1 (0.0 25.88 474.3 (54.2 17 0.238 0.008 2.431 3.618 7.183 88) 2 14 78) 0.08 11.70 27.46 17 0.428 0.035 0.699 0.219 7.217 0.369 3 5 9 0.13 10.67 10.04 177 0.493 0.035 1.393 1.196 9.894 1.612 0 7 7 0.09 95 9.157 0.416 0.034 5.052 0.993 0.993 8.497 1.501 6 0.26 749 9.879 0.267 0.030 6.240 2.384 0.772 8.394 0.994
  26. 26. Example  Financial Ratios Comparison of Companies in the Same Business Sector
  27. 27. Example  Financial Ratios Comparison of Companies in the Same Business Sector
  28. 28. The 22 Financial Ratios (1) (2) (3) (4)
  29. 29. The 22 Financial Ratios (5) (6) (7) (8)
  30. 30. The 22 Financial Ratios (9) (10) (11) (12)
  31. 31. The 22 Financial Ratios (13) (14) (15) (16)
  32. 32. The 22 Financial Ratios (17) (18) (19)
  33. 33. The 22 Financial Ratios (20) (21) (22)
  34. 34. 5.2 Recommendation From 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.
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