The Analysis of TBIG Stock Fair Value Using the Free Cash Flow to Equity and Relative Valuation Methods

Dwi Puja Sastra; Christimulia Purnama Trimurti; Yeyen Komalasari; R Tri Priyono Budi Santoso

doi:10.37899/journal-la-sociale.v6i3.1855

Dwi Puja Sastra Master of Management Program, Dhyana Pura University, Badung, Bali, Indonesia
Christimulia Purnama Trimurti Master of Management Program, Dhyana Pura University, Badung, Bali, Indonesia
Yeyen Komalasari Master of Management Program, Dhyana Pura University, Badung, Bali, Indonesia
R Tri Priyono Budi Santoso Master of Management Program, Dhyana Pura University, Badung, Bali, Indonesia

DOI: https://doi.org/10.37899/journal-la-sociale.v6i3.1855

Keywords: TBIG, Relative Valuation, Fair Price, Stock Price

Abstract

This study aims to estimate the fair value of PT Tower Bersama Group Tbk shares using the Free Cash Flow to Equity and Relative Valuation methods. It compares both methods to determine which is more accurate and assesses the risk or accuracy of the current TBIG share purchase price that investors may pay. This study uses a quantitative descriptive methodology with a case study approach. Based on this methodology, it describes in detail the characteristics and phenomena present in PT Tower Bersama Infrastructure Tbk, specifically regarding the analysis of fair stock prices using the Free Cash Flow to Equity and Relative Valuation (PER and PBV) methods. Based on the calculation, a comparison is made between the intrinsic value of TBIG shares and the stock price on the stock exchange from 2018 to 2023. It can be concluded that during this period, the fair value of TBIG shares was below the stock price on the exchange, indicating that the shares were overvalued. As of July 2024, the current stock price is IDR 1,950. Based on the 2023 FCFE calculation, the intrinsic value is IDR 16,859 billion with 22 billion shares outstanding, resulting in an intrinsic value of IDR 766 per share. Since the intrinsic value (IDR 766) is less than the stock price (IDR 1,950), it is categorized as overvalued. Meanwhile, based on the calculation above, the Price-to-Earnings Ratio (PER) of TBIG is 30x. This implies that it would take 30 times the company’s earnings to recoup the investment, which is relatively high.

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