Stock Valuation of PT. Bank ABC Tbk.

: PT Bank ABC Tbk aspires to be one of the top 10 global sharia banks in 2025 in terms of market capitalization. As of December 2023, PT. Bank ABC Tbk ranks 13 with 5,18 billion USD in market capitalization. This research aims to examine PT. Bank ABC Tbk stock by using Discounted Cash Flow (DCF) through Free Cash Flow to Equity (FCFE), and Relative Valuation method through the Price to Book Value (PBV), and to determine whether the stock is undervalued or overvalued. According to Free Cash Flow to Equity (FCFE) valuation result, the intrinsic value per share of PT. Bank ABC Tbk is Rp 37.497 per share, while its share price as of 31 December 2023, is Rp 1.740, indicating that the stock of PT. Bank ABC Tbk is undervalued by the market. This means that the market has not completely recognized the PT. Bank ABC Tbk 's ability to generate future cash flows. PT. Bank ABC Tbk’s undervalued stock offers the possibility of returns for the potential investor as the share price rises over time to reflect the intrinsic value per share. The company’s


INTRODUCTION
PT. Bank ABC Tbk is Indonesia's biggest Islamic bank and was created in 2021 because of the consolidation of three Islamic bank and is already listed in BEI.PT.Bank ABC Tbk has aspiration to be the Top 10 Global Islamic Bank in terms of market capitalization.Market capitalization is calculated by multiplying the number of outstanding shares by the market price per share.PT.Bank ABC Tbk can increase market capitalization by giving information to the market about the intrinsic value of the company, if its worth to buy than it will increase the stock demand and increased the stock price as well as the market capitalization.Figure 1 provides information about the share price performance of PT.Bank ABC Tbk between 2021 and 2023, in which the closing price and market capitalization in 2021 are the highest among the periods, i.e., the first quarter of 2021 performed the closing share price at 2.290 and the market value achieved 93,96 Trilliun.Even though the market capitalization increased from the fourth quarter of 2021 to 80.26 trillion in the fourth quarter of 2023, it is still low compared to the first quarter of 2021, which reached 93.96 trillion in market capitalization when PT. Bank ABC Tbk was established.This research aims to examine the real value of the stock compared to the current market price and determine the relative value with similar stocks in the market.In addition, by calculating the stock valuation of PT.Bank ABC Tbk, it can be determined whether the stock is undervalued or overvalued as an information for investor to make strategic buying decisions and can influence market capitalization of PT.Bank ABC Tbk.Therefore, this study analyzed the stock valuation of PT.Bank ABC Tbk by using Discounted Cashflow (DCF) and Relative Valuation Method and to determine whether the company is undervalued or overvalued based on the market perception.

CONCEPTUAL FRAMEWORK
Figure 3 illustrates the concept of interrelated components to solve the business issue in this research.The author analyzes the business environment and financial performances of PT.Bank ABC Tbk.The Business Environmental analysis will be conducted using Porter's 5 Forces framework and the External component of SWOT Analysis, which are the opportunities (O) and threats (T), meanwhile the internal analysis will define the financial performances and Internal component of SWOT Analysis, which are the strengths (S) and weaknesses (W) to understand how these factors affect its business performance.Valuation of the company will be by using Free Cashflow of Equity method, and by Price to Book method.

STOCK IS UNDERVALUED
Based on the FCFE valuation result as presented in Table 3, the intrinsic value per share of PT.Bank ABC Tbk is Rp 37.497 per share, while its share price as of December 31, 2023, is Rp 1.740, indicating that the stock of PT.Bank ABC Tbk is undervalued by the market.This means that the market has not completely recognized the company's ability to generate future cash flows.PT.Bank ABC Tbk's undervalued stock offers the possibility of returns as the share price rises over time to reflect the intrinsic value per share.Based on the result, this research recommends to buy the stock of PT.Bank ABC Tbk because it is undervalued based on FCFE.

D. Relative Valuation
In this case there are three Syariah Bank that will be used for benchmarking which are: BANK.JK, BTPS.JK, PNBS.JK.The author determines the comparable firms based on Islamic bank that has been registered in Indonesian Stock Exchange (IDX).Based on the calculations Table 4.10, PT.Bank ABC Tbk has a Price to Book Value (P/BV) ratio of 2.07, lower than the average PBV ratio compared to the PBV of the average of its peers which is 2.72.This means PT Bank ABC Tbk is undervalued ie. the share is underpriced compared to the average of its peers.

Figure: 1 ISSN
Figure: 1 Share Price Performance of PT.Bank ABC Tbk Source: PT.Bank ABC Tbk website, 2023

as a percentage of intrinsic Value The stock is undervalued or overvalued ISSN: 2581-8341 Volume 07 Issue 06 June 2024 DOI: 10.47191/ijcsrr/V7-i6-41, Impact Factor: 7.943 IJCSRR @ 2024 www.ijcsrr.org 3906
ForcesThe bargaining power of suppliers is moderate, as customers act as both cash providers and suppliers, contributing revenue through financing, particularly in institutional banking which expects significant returns, viewed as costs by the bank.This can be mitigated through negotiation and good relationships.The bargaining power of buyers is low due to the similarity of banking products, strict regulation, and pricing strategies based on macroeconomic factors, limiting customers' negotiation power.The threat of new entrants is low due to strict regulations by the Indonesian Financial Services Authority (OJK) and Bank Indonesia, including minimum capital requirements and Shariah compliance.The threat of substitutes is moderate, with Islamic banking products similar to those in the Financial Technology Syariah and Multifinance Syariah sectors, but banking services are generally preferred due to higher interest rates in fintech and multifinance.Lastly, rivalry among existing competitors is high, with PT.Bank ABC Tbk facing competition from conventional banks, digital banks, multifinance, and fintech, which are more adaptable to technological changes.The bank must balance technological advancements with adherence to Islamic standards and capital regulations.
* Corresponding Author: Naeyza Islamey Ningrum Volume 07 Issue 06 June 2024 Available at: www.ijcsrr.orgPageNo.3903-3909Thisresearchcompares its relative valuation to three other publicly listed companies in the same industry, specifically in the Islamic banking sector: Bank.JK, BTPS.JK, and PNBS.JK.This research uses multiple relative valuations, which utilize the price-to-book value that is calculated as follows (Damodaran, 2012)B.SWOT AnalysisPT.Bank ABC Tbk demonstrates strong financial performance, evidenced by a 15.67% asset growth from 2021 to 2023, improved ROA from 1.61% to 2.35%, reduced CIR from 52.57% to 49.86%, and a lower NPF ratio from 2.93% to 2.08%, showcasing effective risk management and operational efficiency.Capitalizing on Indonesia's 87% Muslim population, the bank has significantly expanded its market share in Sharia banking, aligning with the growing demand for Sharia-compliant products.However, weaknesses in digital transformation and IT infrastructure need addressing, with opportunities in increasing active and registered users, expanding merchant partnerships, and enhancing ATM and CRM deployments to improve operational efficiency and consumer engagement.The growing consumer base, evidenced by a 10.53% increase to 19.65 million and a 25.89% rise in active mobile app users, presents opportunities for product penetration and digital banking service expansion.Despite these strengths, the bank faces threats from shifting consumer preferences towards digital banking, necessitating continued investment in digital capabilities to maintain competitive advantage and enhance customer loyalty and satisfaction.C.

Free Cash Flow to Equity (FCFE) Valuation Table 3. Table 4.18 Free Cash Flow to Equity Calculation (in IDR Million)
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