Introduction to Valuation :

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1 Introduction to Valuation :
BUSINESS VALUATION KJPP YANUAR BEY & REKAN Introduction to Valuation : Discount Factor IVAN TEGUH KHRISTIAN

2 Goals Memaparkan overview tentang discount factor
Team Y&R dapat melakukan kalkulasi discount factor

3 Cost of Capital = Expected Return
Nilai disusun berdasarkan fungsi dari pendapatan dimasa mendatang yang “ditarik” ke masa kini dengan suatu harapan imbal hasil tertentu Cost of Capital = Expected Return “tingkat pendapatan yang diharapkan oleh pasar untuk mendapatkan dana untuk membiayai suatu investasi” -opportunity cost- Source : IVAN TEGUH KHRISTIAN

4 Shareholder’s Terminal Value Pay cash dividend
Firm with excess cash Shareholder’s Terminal Value Pay cash dividend Shareholder invests in financial asset A firm with excess cash can either pay a dividend or make a capital investment Invest in project Because stockholders can reinvest the dividend in risky financial assets, the expected return on a capital-budgeting project should be at least as great as the expected return on a financial asset of comparable risk. Source : stern-edu IVAN TEGUH KHRISTIAN

5 FORMULA IVAN TEGUH KHRISTIAN

6 CAPM The capital asset pricing model: E(R) = Rf + B(Rm-Rf) where:
E(R) = Expected return Rf = risk free rate of return B = beta Rm = market return Content Source : DIOLAH IVAN TEGUH KHRISTIAN

7 Risk Free Practice : use Government Bond Yield
For an investment to be riskfree, i.e., to have an actual return be equal to the expected return, there must be: No default risk; this usually means a government-issued security; but, not all governments are default free. No uncertainty about reinvestment rates. Practice : use Government Bond Yield Source : Source : P.V. Viswanath - DIOLAH IVAN TEGUH KHRISTIAN

8 Risk Free Find…. IVAN TEGUH KHRISTIAN

9 “USE SINGLE RISK FREE RATE FOR ALL FLOWS”
Theoretically, this means using different riskfree rates for each cash flow - the 1 year zero coupon rate for the cash flow in year 1, the 2-year zero coupon rate for the cash flow in year Practically, if there is substantial uncertainty about expected cash flows, it is enough to use a single riskfree rate for all flows “USE SINGLE RISK FREE RATE FOR ALL FLOWS” Source : P.V. Viswanath - DIOLAH IVAN TEGUH KHRISTIAN

10 Risk Premium The risk premium is the premium that investors demand for investing in an average risk investment, relative to the riskfree rate. As a general proposition, this premium should be greater than zero increase with the risk aversion of the investors in that market increase with the riskiness of the “average” risk investment Source : P.V. Viswanath - DIOLAH IVAN TEGUH KHRISTIAN

11 Risk Premium FIND…. Practice: Gunakan Damodaran Theory :
Survey investors on their desired risk premiums and use the average premium from these surveys. Surveying in practice is difficult because there is no way to ensure that the numbers that participants provide are the ones they use in their own decision making. Assume that the actual premium delivered over long time periods is equal to the expected premium - i.e., use historical data Estimate the implied premium in today’s asset prices. Practice: Gunakan Damodaran Source : P.V. Viswanath - DIOLAH IVAN TEGUH KHRISTIAN

12 Beta “A coefficient measuring a stock’s relative volatility” or in other word “Beta measures a stock’s sensitivity to overall market movements” “is a number describing the correlated volatility of an asset in relation to the volatility of the benchmark that said asset to be compared to.” It measures the part of the asset’s statical variance that cannot be removed by diversification. Source : UBS Warburg Dictionary of Finance and Investment Terms IVAN TEGUH KHRISTIAN

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14 Beta, read…. Stock ANTAM has a beta of 2
The IHSG index increases in value by 10% The price of ANTAM is expected to increase 20% over the same time period Stock ANTAM has a beta of -2 The price of ANTAM is expected to Decrease 20% over the same time period Source : …….. IVAN TEGUH KHRISTIAN

15 Beta, read…. Beta is a measure of volatility
Volatility is associated with risk If beta is a measure of risk, then investors who hold stocks with higher betas should expect a higher return for taking on that risk IVAN TEGUH KHRISTIAN

16 Beta, read…. Theoriticaly : use regression
Practice : Use Thomson Reuters + How to calculate leverage / unleverage Source : P.V. Viswanath - DIOLAH IVAN TEGUH KHRISTIAN

17 WACC = (D/V)*Rd*(1-T) + (E/V)*Re
Weighted average cost of capital: WACC = (D/V)*Rd*(1-T) + (E/V)*Re where: D = market value of firm’s debt Rd = return on debt securities T = tax rate E = market value of firm’s equity securities Re = return on equity securities (from CAPM) V = total value of firm’s securities (D + V) Source : P.V. Viswanath - DIOLAH IVAN TEGUH KHRISTIAN

18 Determining Cost of Debt
Method 1: Ask an investment banker what coupon rate would be on new debt. Method 2: Find bond rating for the company and use yield on similarly rated bonds. Method 3: Find yield on the company’s existing debt. Common Practice : Use Bank Indonesia - Seki 1.26 (IDR), Seki 1.27 (USD) Source : P.V. Viswanath - DIOLAH IVAN TEGUH KHRISTIAN

19 Cost of Debt – find… IVAN TEGUH KHRISTIAN

20 Cost of Debt – find… Dalam Penilaian Bisnis, terdapat manfaat pajak (Tax Shield), sehingga Cost Of Debt (1-Tax) Dalam Penilaian Assset, tidak terdapat, karenya objek pajaknya adalah terletak pada pedapatan bukan pada aset perusahaan IVAN TEGUH KHRISTIAN

21 Capital Structure Penilai bisnis (VIII C3):
Dalam hal penilaian dilakukan atas obyek penilaian yang merupakan kepemilikan Minoritas, maka Penilai Usaha dapat menggunakan struktur modal berdasarkan nilai buku Dalam hal penilaian dilakukan atas obyek penilaian yang merupakan kepemilikan Mayoritas. maka Penilai Usaha wajib menggunakan struktur modal berdasarkan pasar Penilai Aset Komposisi seusai yang berlaku di pasar –common practice IVAN TEGUH KHRISTIAN

22 Praktek BUSINESS VALUATION KJPP YANUAR BEY & REKAN
IVAN TEGUH KHRISTIAN