What is BUMI.JK's Intrinsic value?

Bumi Resources Tbk PT (BUMI.JK) Intrinsic Value Analysis

Executive Summary

As of June 13, 2025, Bumi Resources Tbk PT's estimated intrinsic value ranges from $10.74 to $118.40 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $118.40 -14.2%
Discounted Cash Flow (5Y) $78.05 -43.4%
Dividend Discount Model (Multi-Stage) $103.67 -24.9%
Dividend Discount Model (Stable) $10.74 -92.2%

Is Bumi Resources Tbk PT (BUMI.JK) undervalued or overvalued?

With the current market price at $138.00, the stock appears to be significantly overvalued.

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 Bumi 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 0.49 0.67
Cost of equity 10.5% 13.6%
Cost of debt 4.0% 7.0%
Tax rate 20.6% 23.2%
Debt/Equity ratio 0.17 0.17
After-tax WACC 9.4% 12.4%

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: 10.9% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $1,360 (FY12-2024) to $2,020 (FY12-2034)
  • Net profit margin expansion from 7% to 25%
  • Capital expenditures maintained at approximately 7% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $0 $2,116M 78.3%
10-Year Growth $0 $3,036M 60.5%
5-Year EBITDA $0 $1,579M 70.9%
10-Year EBITDA $0 $2,254M 46.8%

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: 12.0%
  • Long-term growth rate: 4.0%
  • Fair value: $103.67 (-24.9% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 13.6% (Low) to 10.5% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $0 to $0
  • Selected fair value: $10.74 (-92.2% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $51244230M
Enterprise Value $56691652M
Trailing P/E 147.71
Forward P/E 21.14
Trailing EV/EBITDA 4.70
Current Dividend Yield 0.01%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.17

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% $35.52
Discounted Cash Flow (5Y) 28% $19.51
Dividend Discount Model (Multi-Stage) 22% $20.73
Dividend Discount Model (Stable) 17% $1.61
Weighted Average 100% $85.97

Investment Conclusion

Based on our comprehensive valuation analysis, Bumi Resources Tbk PT's weighted average intrinsic value is $85.97, which is approximately 37.7% below the current market price of $138.00.

Key investment considerations:

  • Strong projected earnings growth (7% to 25% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.17)

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