Chapter I INTRODUCTION

Transcription

1 Chapter I INTRODUCTION 1.1 Background Indonesia as developing country requires an efficient financial market that consists of sub system of money market, obligation market, stocks market and sub system of mortgage market. The system is correlated each other to support development of national economy and to bring into contact deficit party which require fund with surplus party which have excess of fund. One of parameters to establish efficient financial market is the market transparency which means that prices on traded assets (e.g., stocks, bonds, or property) already reflect all known information, and instantly change to reflect new information. Therefore, according to theory, it is impossible to consistently outperform the market by using any information that the market already knows, except through luck (Fama, 1991). It implies that all information is cost free and available to everyone at the same time (Reily, Brown, 2006). Related to this condition, this thesis discusses the financial performance of retail industry in Indonesia Stock Exchange and conducts a further analysis on a chosen company from the industry. The retail industry in Indonesia is an industry with stable growth based on Badan Pusat Statisik Indonesia (Tulus Tambunan, 2008). 1

2 2 An increasing of people basic needs will effectively influence the business growth as well. In Indonesia, the retail business provides its customers with household basic need including food, clothes or other needs. According to the Badan Pusat Statistik Indonesia (table 1.1), the country s household consumption experienced an upward trend during the last 5 years. Table 1.1 Percentage of Monthly Average per Capita Expenditure by Commodity Group, Indonesia, , (BPS, 2009) Food Category: Commodity Group Cereals Tubers Fish Meat Eggs & Milk Vegetables Legumes Fruits Oil and Fats Beverage stuffs Spices Miscellaneous food items Prepared food ,44*) 10,29*) 10,48*) 11,44*) - Alcoholic beverages Tobacco and betel Total of Food

3 3 Not Food Category: - Housing and household facility Goods and services Clothing, footwear, and headgear Durable goods Taxes and insurance Parties and ceremony Total of Non Food Research problems Stock markets in Indonesia certainly build on fundamental principal, such as information efficiency. Each private investors, government, issuer, and another market analyst assumed have the same information in the quantity and quality. Thereby, expected what is going on in company issuer reflected correctly in market, in the form of trading and stock price. The default of some finance company in US that enlisted in US stock market showed us the information actually less unbelievable. It affects investor s when making investment decision process, by compared this sector industry with other sector in stock market. Sometimes, their decision drives by rumors in public, not by fundamental valuation for that company (Reilly, Brown, 2006).

4 4 This thesis is to analyze the financial performance of the retail industry and specific valuation analysis for PT Matahari Putra Prima, Tbk (MPPA). This thesis also tries to answer the following questions, - What information we could have based on the industry analysis? - Is MPPA stock market price in the end of December 2008 over value or under value compared to fundamental value? - Is it worth for the investor to invest in the MPPA stock? Considering the questions stated above, this thesis will analyze 5 years data from financial statement of published audited financial data from the companies that are listed as retail companies in Indonesia Stock Exchange and make an assessment of valuation analysis to MPPA. The methods will be selected based on the assessment. The purpose of the calculation is to see the valuation of the market price of MPPA and to see the fair value of the price. 1.3 Purposes and Benefits The purposes of writing this thesis are: 1. To know retail industry average performance during To know MPPA five years performance and compare it to industry average. 3. To conduct valuation of MPPA based on five years historical data and financial analysis

5 5 The benefits of writing this thesis are: 1. To give information to the investor which interest in retail industry and hopefully after reading the thesis, they have new point of view about this industry. 2. To give information to the investor why they have to invest or not to invest in MPPA stock and to help them to make clear investment decision. 3. Provides an illustration of the readers of financial condition related to retail industry, and specifically the financial and valuation of a retail company (MPPA). 1.4 Scope The scope of writing this thesis is to analyze retail sector industry. There are 15 (fifteen) companies to be analyzed which is listed in Indonesia Stock Exchange (table 1.2) and its choices refer to the historical data availability during Type of data to be collected is financial statement consisting of Balance Sheet, Profit Loss Statement, and Cash Flow.

6 6 Table 1.2 Fifteen Companies in Retail Industry Which is Listed in IDX Stock Quote ACES ALFA AMRT CSAP HERO KOIN MACO MAPI MPPA MTSM RALS RIMO SONA TKGA TRIO Company Names ACE HARDWARE INDONESIA ALFA RETAILINDO SUMBER ALFARIA TRIJAYA CATUR SENTOSA ADIPRANA HERO SUPERMARKET KOKOH INTI AREBAMA COURTS INDONESIA MITRA ADIPERKASA MATAHARI PUTRA PRIMA METRO SUPERMARKET REALTY RAMAYANA LESTARI SENTOSA RIMO CATUR LESTARA SONA TOPAS TOURISM INDS. TOKO GUNUNG AGUNG TRIKOMSEL Source: Indonesia Stock Exchange 31 December 2008 The scope of the study will explain that in order to solve the problem defined earlier, the author will conduct a company valuation only using the public financial information available to the market. The industry analysis will be calculated by using the Ratio Analysis and Cash Flow Analysis of data generated from the financial reports for 5 years. In term of that, the data will be used to make forecasting and valuating MPPA with an appropriate method that will be selected later based on the

7 7 condition of the company. Method that has been selected will be used to calculate the forecasting financial statement and calculating appropriate value of MPPA. The writer will conduct a company valuation only using the public financial information available to the market. There might be other non-financial information affecting the valuation, but the writer limits the analysis to the public financial info only. 1.5 Organization of Thesis Chapter I describe background that discussed in this thesis, problems to be discussed, purposes and benefits of writing this thesis, scope and organization of thesis. Chapter II explained the literature reviews of theories which are linked to this thesis, such as financial ratios formulation and valuation. Chapter III describes case method, case study definition, case study analysis process, data collection and tools of analysis. Chapter IV explains Indonesian macro economy, wholesale production goods industry player profile, competitors and company profile. In company profile, it describes company s business. After that, conduct company financial statement ratios analysis, and the result compared to industry average. Based on historical data, make financial statement forecast and finally to conduct company s valuation. Chapter V, the last chapter of this thesis, describes ratio analysis interpretation and valuation interpretation.