Stock Valuation Using Discounted Cash Flow and Relative Valuation Methods on Cosmetics and Household Goods Sub-Sector Listed on the Indonesia Stock Exchange for 2021-2025 Projections

Abstract

This research aims to examine the intrinsic value of stocks in the cosmetics and household goods sub-sector listed on the Indonesia Stock Exchange. Data used were from 2016-2020 to calculate the historical performance of each company and projected from 2021-2025 based on three scenarios, pessimistic; moderate; and optimistic. The Discounted Cash Flow (DCF) method was used with the Free Cash Flow to Firm (FCFF) approach and the calculation of the Relative Valuation (RV) method with the Price to Book Value (PBV) and Price to Earning Ratio (PER) approaches. The results found that by using the DCF method, UNVR, KINO, and TCID were overvalued in all scenarios, while MBTO and MRAT were overvalued in the pessimistic and moderate scenarios and undervalued in the optimistic scenario. Meanwhile, by using the relative valuation method with the PER approach, in all scenarios, the intrinsic values of UNVR wasovervalued, while KINO, TCID, MBTO and MRAT were undervalued. For the PBV approach, the intrinsic values of UNVR was overvalued in all scenarios, while KINO, TCID, MBTO, and MRAT were undervalued in all scenarios. Overall, UNVR shares were overvalued by -54,67%, KINO shares were overvalued by -81,27%, TCID shares were overvalued by -45,37%, MBTO shares were overvalued by -47,19%, and MRAT shares were undervalued by 15,65%.