This report was commissioned to examine whether it is in the best interest of PT. Armindo Catur Pratama (ACP) to implement an Initial Public Offering (IPO). As a framework for our method of analysis, we have implemented researching and gathering of information about the industry and its opportunities and threats and also the company core capabilities and historical performance, accompanied with future projections about company's financial position for the next five years. ACP's sales volume in Indonesia is projected to experience growth from new infrastructure projects in both public and private sectors due to government initiatives and economic growth respectively. The projected sales growth will be used in our analysis as primary factor to determine whether ACP will require further financing and whether IPO is suited to be their financing option. In our enterprise valuation analysis, we concluded that for the next 5 years, ACP could generate cash from stock issuance of IDR 400 billion with 10% sales growth each year, IDR 600 billion with 20% sales growth each and IDR 800 billion with 30% sales growth each year. The scenario that requires financing is at the 20% and 30% sales growth projection for IDR 200 billion and 500 billion respectively but it can only be achieved though new product sales or diversification instead of recurring business. If ACP will continue to operate to produce existing products, it will not need financing as it can be supported by the company growth itself. If ACP only required cash to support the growth 20% & 30%, financing through bank loan would provide better options since it with generate higher ROE over ROA. If ACP need more cash to support other investment opportunities hence IPO will provide better options but the additional cash should generate 2.5 times of sales on the equity to maintain current ROE level. Additional consideration for ACP to go for IPO as an option, is that the company needs to prepare its organizational structure and financial reporting system to maximize the potential advantages of the IPO.



Research Location : PT Armindo Catur Pratama



Confidential until November 5, 2016