Stock Valuation Analysis of Technology Sector Companies Listed in Indonesia Stock Exchange in the Year 2018-2022

Abstract

In the year 2018, Indonesia’s equity market experienced an IPO boom where there is a significant increase in the number of companies who went through initial public offering (IPO). In the next years, Indonesia IPO market continue to grow with no less than 50 companies going public each year, rendering Indonesia as the biggest IPO market in Southeast Asia since 2018. Indonesian IPO within the year 2018-2022 is dominated by four sectors, consumer, properties & real estate, basic materials, and technology. Though only the fourth largest IPO sector, the sector grew significantly by 240% and funds raised from technology companies IPO deals comprises 36% of total funds raised from IPO in 2018-2022. However, after a few years of trading, only 3 out of 24 technology sectors company are trading above their initial offering price and closing price of the first trading day. The decline in share price spreads evenly across the technology sectors companies that went public in 2018-2023 despite size and market capitalization. This research aimed to evaluate the values of technology sector companies who went public in the year 2018-2022 and analyze whether their current share price is undervalued or overvalued compared to the true value of the company. This study analyzed two aspects of company value, the relative value and the absolute value. The relative valuation of each sample company is conducted through comparable companies analysis and absolute valuation is conducted through discounted cash flows analysis. The sample of this research comprised of 22 technology sector companies that went through IPO within the year 2018-2022. The data used in this research is secondary data collected from the official website of each sample companies, Indonesia Stock Exchange, and Bloomberg Terminal. Based on the relative valuation conducted through comparable companies analysis, the current share price of NFCX, PGJO, CASH, DCII, EDGE, UVCR, RUNS, WGSH, and WIRG are overvalued in the market. On the other hand, the current share price of DIVA, LUCK, HDIT, TFAS, DMMX, GLVA, WIFI, ZYRX, BUKA, GOTO, AXIO, BELI, and NINE are undervalued in the market. Furthermore, based on the absolute valuation conducted through discounted cash flows analysis, the current share price of NFCX, TFAS, DMMX, PGJO, CASH, DCII, EDGE, RUNS, WIRG, and BELI are overvalued in the market and WGSH is fair valued in the market. On the other hand, the current share price of DIVA, LUCK, HDIT, GLVA, WIFI, ZYRX, UVCR, BUKA, GOTO, AXIO, and NINE are undervalued in the market.