Adaro listed in Indonesia Stock Exchange (BEI) started on July 16, 2008.
PT Adaro Energy Tbk registered and traded with 11,139,331,000 shares with code: ADRO. The shares are offered at a price of Rp 1,000 per share or the cost Rp12, 253 trillion. From previous report, there are oversubscribed of ADRO stocks of 55,01 times from the number of shares that offered by company. This indicates that investors had high interest on coal mining stocks. In the bidding process, the portion of shares allocated to foreign investors reached 74.77% and the rest of local investors for 25.23%.
In the early January 2009, ADRO set its selling and productivity target of coal up to 80 per ton in the upcoming years, that’s why company plan to take some plans to achieving its target during the global crisis back then. ADRO also prepare its cash to pay its payable and do some investments. This condition indicates that company performs well and finally affecting company’s stock return index to increase.
On January 28, 2010 ADRO return index increased up to 3,26%, this is related to the announcement that ADRO will supply the domestic coal demand of 11 million tons in 2010. Commissioner ADRO, Sandiaga S. Uno claims the company is a supplier of coal to the largest domestic market compared to PT Tambang Coal Bukit Asam Tbk (PTBA).
On March 31, 2010 Company recorded a net profit of Rp4, 4 trillion, during the year 2009. It jumped more than five times than the year 2008 amounting to Rp887 billion. The increase was supported by a sharp increase in revenue along with the realization of higher coal prices and higher production volume. Director of Adro Garibaldi Thohir in a press release in Jakarta, Wednesday (03/31), said company revenues jumped 49 percent to Rp26, 9 trillion. Gross profit margin rose from 27 percent to 41 percent in 2009.
Average and Standard Deviation
The standard deviation is used in statistics to measure the variability or dispersion of a data set. If the data are very close to the average value, we have a small standard deviation. In some cases the data are dispersed over a wide range of values then we have a large standard deviation.
Ri Rm IHSG Rm LQ45
Average 0.108% 0.081% 0.075%
Standard deviation 0.0383% 0.0202% 0.0240%
Compared to market index return the company’s stock return on average has a greater value than other company in general. It shows that the company has better return ability than the other company in doing their business. Looking on the average return and standard deviation, it can be seen that the higher the standard deviation (risk), the higher the average return (profit).
Beta of Company using Regression Analysis
Beta related to hypothesis testing of regression
Beta is a measure of a stock's volatility in relation to the market. A stock that swings more than the market over time has a beta above 1.0. If a stock moves less than the market, the stock's beta is less than 1.0. A stock with beta equal 1 means that the stock's price will move along with the market. High-beta stocks are supposed to be riskier but provide a potential for higher returns; low-beta stocks pose less risk but also lower returns. In simple words, it can be written as:
Beta = 1, the stock’s price will move with the market.
Beta <> 1, the stock’s price will be more volatile than the market.
The calculations of regression give result of the value of the company stock’s beta. Based on that calculation there are two betas results found. For the IHSG, the beta is 1.1923. This figure shows that the company stock's price will be more volatile than the market price. While, the beta value of LQ45 is 0.9514 which mean that the company stock’s price will be less volatile than the market price. If the betas are related to the dispersion, there is a relationship between them. LQ45 which has less volatility to the company’s stock also has close relationship to the number of dispersion between stock’s dispersion value and LQ45’s dispersion value. The dispersion value of stock is 0.0383 and 0.0240 for the LQ45. The difference between them is 0.0143.
Beta market model on CAPM
Capital Asset Pricing Model is an economic model for valuing stocks by relating risk and expected return. Based on the idea that investors demand additional expected return (called the risk premium) if asked to accept additional risk. Historically, the risk-free rate has been around 3.5-4.5% and is influenced by interest rate movements.
From the calculation, the beta of LQ45 is smaller than IHSG (LQ45= 0.9514 and IHSG = 1.192316). It shows that company will get different expected return in which IHSG will result in higher return than LQ45 - as we know that the higher value of beta will give higher risk and require higher rate of return on securities. It can be proved by the average of market return of IHSG which is greater than LQ45, 0,08% and 0,07%. In the other hand, it will result in a high risk, because it is more volatile.
Conclusion
After analyze the risk of the company and market for determined period, it can be concluded that this company has low risk in their stock. This statement is strengthened by the result of standard deviation calculation. With small result of standard deviation, it means that the company has stable performance in doing their business. For investors, this condition make they feel confident to invest in this company. Even though this company has stable position of stock price (low risk), but it doesn’t promises a high profit. It should be considered that higher risk, will results on higher profit.
Beta measures stock's volatility in relation to the market. Based on calculation we did, we came up with two betas. Company’s beta that related to IHSG is 1.1923, which means that company’s stocks price is more volatile that IHSG market price. This high volatile tends to be riskier, as well as providing higher return. In other hand, company’s beta that related to LQ45 is 0.9514, which means that average market stocks prices are more volatile than company’s stock prices. It shows that company has lower risk, but lower return as well.
