The study on IPO stock pricing of PLN Java Bali power company I, INC.

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Harjowinoto, Waluyo N. and Pasti, Indra and Subagio, Tony and Soeroyo, Kurnia Hakim and Salim, Hasim and Juliarso, Bintang (1997) The study on IPO stock pricing of PLN Java Bali power company I, INC. Undergraduate thesis, IPMI Business School.

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Abstract

PLN Java Bali power company I, Inc. or PLN PJB I is the subsidiary of PT. PLN (persero), the state electricity corporation. It was established to enable the state-owned enterprise to anticipate changes in business environment and more competition from the private sector participation. To finance this business move, PLN PJB I planned to go public through an inital public offering. From the capital market point of view, PLN PJB I has to align its strategy and program with the listing requirements, particularly those of the domestic stock exchanges, but also those of the major foreign ones for cross-listing. Apart from a good capital market strategy, PLN PJB I also needs to ensure the soundness of its performance. PLN PJB I's financial performance was analyzed using four criteria. Its liquidity was found to be poor, mainly because of overdue payment from PT. PLN (Persero). It is moderately efficient in terms of the low inventories, has a low leverage and a reasonable profitability. PLN PJB I's performance was also benchmarked against other similar power generating companies in Asia. The unimpressive financial indicators certainly require some improvements in PLN PJB I's operation. These ongoing improvements would include specific programs customized for the company, based on a SWOT analysis. A financial projection was set for the ten-year 1997 to 2006 period, assuring all the programs were in place. Based on the financial projection, the IPO stock price was estimated using different valuation methods, such as asset-based, earning-based, dividend-based and P/E comparison. This price, coupled with an appropriate discount would generate market capitalization that can be absorbed merely by the domestic capital market. In normal situation, a foreign listing would be recommended to obtain objective valuation from investors familiar with the power generation business. In time of economic crisis, with fluctuating foreign exchange rate, It was suggested that the IPO should be carried out on domestic market only.

Item Type: Thesis (Undergraduate)
Subjects: H Social Sciences > H Social Sciences (General)
Divisions: Library > GFP (Group Field Project)
Depositing User: Dede Faujiah
Date Deposited: 27 Sep 2022 06:42
Last Modified: 27 Sep 2022 06:42
URI: http://repository.ipmi.ac.id/id/eprint/1568

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