VALUATION ANALYSIS FOR FAIR VALUE OF SHARES OF PT. GARUDA INDONESIA TBK. USING THE FREE CASH FLOW TO FIRM (FCFF) METHOD AND RELATIVE VALUATION METHOD

Abstract

Economic Impact Research proves the travel and tourism industry is a booming business. The report also found that 2017 was a big year for the global travel and tourism sector as a whole, which grew 4.6 percent or 50 percent faster than the global economy as a whole, which experienced a growth rate of 3 percent in 2017. The growth of the industry affects the growth of users of air transportation services. It was seen by the increase in the number of air passengers in Indonesia average of the last 5 years at 8.47 percent. PT. Garuda Indonesia Tbk (GIAA) as one of the major airlines in Indonesia should enjoy the growth of flight service users. But the fact has not been matched by GIAA's stock performance in recent years. This research aims to valuate the fair value per share of GIAA as a comparison with prices in the market. This research is also intended to determine whether prices on the market are undervalued or overvalued. Information used in this research was in the form of secondary data of financial statement of GIAA, financial report of comparable companies, and stock prices of comparable companies. The analytical method used in determining the fair value of shares is Discounted Cash Flow (DCF) and Relative Valuation in three scenarios: optimist, moderate, and pessimist. DCF uses the Free Cash Flow to Firm (FCFF) approach. Relative Valuation Analysis begins by comparing similar companies in the same business field, choosing and determining multiple in accordance with the comparison company. Multiple used were: Price Earnings Ratio (PER), Price to Book Value (PBV), and Price to Sales Ratio (P/S).
Keywords: Free Cash Flow to Firm, Relative Valuation, Price to Earning Ration, Price to Book Value, Garuda Indonesia