What is ARII.JK's Intrinsic value?

Atlas Resources Tbk PT (ARII.JK) Intrinsic Value Analysis

Executive Summary

As of June 10, 2025, Atlas Resources Tbk PT's estimated intrinsic value ranges from $293.51 to $928.57 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $928.57 +220.2%
Discounted Cash Flow (5Y) $293.51 +1.2%
Dividend Discount Model (Multi-Stage) $513.29 +77.0%
Dividend Discount Model (Stable) $369.13 +27.3%

Is Atlas Resources Tbk PT (ARII.JK) undervalued or overvalued?

With the current market price at $290.00, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Atlas Resources Tbk PT's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 6.6% 7.1%
Equity market risk premium 7.9% 8.9%
Adjusted beta 1.2 1.39
Cost of equity 16.0% 19.9%
Cost of debt 5.0% 5.0%
Tax rate 22.0% 23.2%
Debt/Equity ratio 1.53 1.53
After-tax WACC 8.7% 10.2%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 9.4% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $315 (FY12-2024) to $789 (FY12-2034)
  • Net profit margin expansion from 0% to 8%
  • Capital expenditures maintained at approximately 13% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $0 $129M 83.5%
10-Year Growth $0 $263M 64.6%
5-Year EBITDA $0 $163M 87.0%
10-Year EBITDA $0 $243M 61.6%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 18.0%
  • Long-term growth rate: 2.0%
  • Fair value: $513.29 (77.0% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 19.9% (Low) to 16.0% (High)
  • Long-term growth rate: 1.0% (Low) to 3.0% (High)
  • Fair value range: $0 to $0
  • Selected fair value: $369.13 (27.3% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $994990M
Enterprise Value $2094789M
Trailing P/E 4.16
Forward P/E 8.67
Trailing EV/EBITDA 2.45
Current Dividend Yield 58.51%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 1.53

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 33% $278.57
Discounted Cash Flow (5Y) 28% $73.38
Dividend Discount Model (Multi-Stage) 22% $102.66
Dividend Discount Model (Stable) 17% $55.37
Weighted Average 100% $566.64

Investment Conclusion

Based on our comprehensive valuation analysis, Atlas Resources Tbk PT's weighted average intrinsic value is $566.64, which is approximately 95.4% above the current market price of $290.00.

Key investment considerations:

  • Strong projected earnings growth (0% to 8% margin)
  • Consistent cash flow generation

Given these factors, we believe Atlas Resources Tbk PT is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.