440 THE INDONESIAN JOURNAL OF BUSINESS ADMINISTRATION Vol. 1, No. 7, 2012: 440-446 STOCK PRICING ANALYSIS OF PT. LEN AS ALTERNATIVE SOURCES OF FUND THROUGH THE INITIAL PUBLIC OFFERING (IPO) ANALISIS HARGA SAHAM PT. LEN SEBAGAI ALTERNATIF SUMBER PENDANAAN MELALUI PROSES INITIAL PUBLIC OFFERING (IPO) Fahmy Helmy Attamimi, Deddy P. Koesrindartoto and Erman Sumirat School of Business and Management Institut Teknologi Bandung, Indonesia fahmy_helmy@yahoo.com Abstract— PT. LEN is one of state owned companies (BUMN) in Indonesia which is engaged in technology industries. As one of state owned companies (BUMN) which enroll in strategic industries, PT. LEN has a very important role in supporting the growth of Indonesia’s development, PT. LEN’s business performance has successfully led PT. LEN as a trillion company. In 2011, the life cycle of this company has been projected from phase Stability to phase Growth. Nevertheless, one issue has arisen when the growth of the company is hampered by funding issue, especially the lack of capital to run the projects. The growth of revenues become unbalanced with working capital, especially liquid working capital (cash). The objective of the company is to Go Public with huge amount of capital which can support the business activities and also to strengthen the capital structure and the liquidity of assets. The sales revenue from some of its stocks is used as an alternative source of fund apart from bank loans. The fund is used to expand the company’s activities, to build the facility of developing system, and also to build fabrication workshop. The total amount of fund needed is 590 billion. During the IPO process, there are several things to be concerned, internally and externally. From the company’s internal perspective, several things to be concerned are company’s financial fundamental analysis, valuation, and company’s feasibility studies in doing IPO. From the external perspective, PT. LEN needs to concern about macroeconomic factor and the industrial competition. Both of internal and external perspective will affect investors’ interest to the company. This thesis uses Discounted Cash Flow as a method to calculate the valuation of the company. This method is used to value stock’s price in a company by calculate the Future Expected Cash Flow. The Discounted Cash Flow method is used to value the stock’s price and the amount of stocks issued by PT. LEN for IPO process so the price will be interesting to the investors. Other than to fulfill the needs of source funding, IPO process is also one of the programs to privatize the state owned companies in Indonesia which is included in BUMN’s Masterplan 2010-2014. Keywords: BUMN (State owned companies), Need of Funds, Initial Public Offering, Discounted Cash Flow I. INTRODUCTION The large’s population of Indonesia and the highest economic growth in Southeast Asia, offering the opportunities for business continuity in the technology industry to enlarge the market share of the industry itself. Meanwhile, the entry barier of new players both from lokal or multi national company, facilitated by the reforms in the regulation, strengthen the position of technology-based industries as one of the most potential and strategic sectors for investment long-term. PT. LEN is one of the SOE (State Owned) Indonesia based technology industry. As one of the companies which involved in the strategic industry, PT.LEN have a vital role in supporting the growth for developing. The company target is going public with a capital which can support various business activities, but behind this is the brought to you by CORE View metadata, citation and similar papers at core.ac.uk provided by SBM ITB Journal System