Guideline for Security

Guideline for Security Analysis

1) Fundamental Analysis (DCF or FCCF model)

1) Macroeconomic analysis

a) Economic growth with GDP trends

b) Trend or change of economic condition with interest rate, inflation, M1 or M2. (enough use 1 variable)

2) Industry Analysis

a) Total number of company in the same industry (1 or 2 digit industry classification (if 2 digit industry classification less than 10 use 1 digit industry classification) based on the Indonesian Stock Market classification) during 5 years.

b) Change and trend of competition of the industry during 5 years with market capitalization, total assets, or sales.(enough use one variable)

3) Company analysis

a) Competitive analysis based on the fact you get from industry analysis and the qualitative analysis of the company (management team, vision, marketing plan, etc).

b) Past 5 years EBIT (if EBIT is negative, use Sales) trend

c) Based on macro economic analysis, industry analysis and a) and b) determine the growth stage of the company.

d) and estimate EBIT next year(s) (If you use stable growth model just one year, but if you use 2 stage or 3 stage growth model until n+1 year)

e) Estimate dividend payout ratio, retention ratio, and return on equity based on historical data in financial report.

f) Estimate (forecast) future dividend or free cash flow to the equity.

g) Estimate cost of the equity using market model (3 year monthly data). Determine the future cost of equity based on the point c).

h) Find the value of each share’s value of the company.

2) Relative Analysis

1) Choose the benchmark of relative analysis ( PE, PER, Market to Book ratio, Tobin’s Q, etc) (enough use one ratio)

2) Calculate the relative ratio of the company and all of the company in the same industry.

3) Make graph of the ratio.

4) Find the mean and standard deviation, and determine over...