Archive for November, 2009

ANALYSIS OF COMPANY STOCK (BANK MANDIRI) AND BUSINESS PORTFOLIO

Posted in Uncategorized on November 3, 2009 by apriliawijayati

BANK MANDIRI PROFILE

bank mandiri logo

 

 

 

Bank Mandiri was formed on 2 October 1998. In July 1999, four state-owned banks which were Bank Bumi Daya, Bank Dagang Negara, Bank Exim and Bapindo, were fused into Bank Mandiri.

Industrial sector: banking industry

Bank Mandiri is the biggest assets in Indonesia enroll their stock in Bursa Efek Jakarta (BEJ) in 14 June, 2003.

With assets that have grown to more than Rp 319 trillion today, and more than 21 thousand employees spread among 956 domestic branch offices and 6 overseas branches and representatives Bank Mandiri has committed to delivering excellence in banking services and to provide wide-ranging financial solutions in investment and sharia’ products as well as bancassurance for our private and state-owned corporate, commercial, small business and micro customers in addition to our consumer clients.

 

CONSUMER BANKING PRODUCTS

MANDIRI SAVINGS MANDIRI CURRENT ACCOUNT MANDIRI DEPOSIT
Mandiri Saving Account Mandiri Current Account Mandiri Deposit
Mandiri Business Saving Mandiri Foreign Currency Deposit
Mandiri Plan Saving
Mandiri Hajj Saving
Mandiri Foreign Currency Deposit
MANDIRI DEBIT MANDIRI PREPAID MANDIRI CREDIT CARD
Mandiri Debit Gaz Card Mandiri Visa
Indomaret Card Mandiri Mastercard
e-Toll Card
MANDIRI CONSUMER LOAN MANDIRI PRIORITY SERVICES INVESTMENT PRODUCTS
Mandiri KPR Mandiri Priority Service Mutual Fund
Mandiri KPR Multiguna Merchant Relations Program ORI & Sukuk Ritel
Mandiri Personal Loan
Mandiri Mitrakarya
Mandiri Tunas KPM
BANCASSURANCE RETAIL BROKERAGE SERVICES CONSUMER BANKING TREASURY
AXA Mandiri Financial Services Retail Brokerage Consumer Banking Treasury
Mandiri Investasi Sejahtera
Mandiri Jiwa Sejahtera
Mandiri Rencana Sejahtera

 

ANALYSIS OF BMRI STOCK RISK AND MARKET RISK

Analysis of average and standard deviation of stock return, market return, and beta:

Standard deviation is:

  1. A measure of the dispersion of a set of data from its mean. The more spread apart the data, the higher the deviation. Standard deviation is calculated as the square root of variance.
  2. A statistical measurement that sheds light on historical volatility. A volatile stock will have a high standard deviation while the deviation of a stable blue chip stock will be lower.

Beta is the tendency of a security’s returns to respond to swings in the market.

Assumptions:

  • Beta = 1 indicates that the security’s price will move with the market.
  • Beta < 1 means that the security will be less volatile than the market.
  • Beta > 1 indicates that the security’s price will be more volatile than the market.

Based on the data collected from daily data of closing price of BMRI stock and Indonesia Capital Market Composite Index (IHSG) period January 2, 2008 till September 30, 2009, the calculation of average and standard deviation is presented:

IHSG BMRI
Average return -2,0284 0,0015
Standard deviation 0,0218 0,0393

 

The beta calculation by regression data analysis:

The beta coefficient for BMRI stock is 0,217686974. It means the volatility of BMRI stock return is smaller than the market volatility. BMRI is a defensive, low beta stock. It is not highly sensitive to market movements, usually lagging when the market rise and yet doing better when the market fall.

 

Factors influence the fluctuation of stock return and market return:

Stock return is the profit that is got by the investor because of their stock investment. The profit can be a capital gain (the difference between bid and ask) and dividend (profit allocation from the company to the investor).

The factors influencing the fluctuation of BMRI are:

Company profit

BMRI can get profit by managing the fund and credit from the clients. When the company gets more profit, it will generate the higher stock return to the investor.

Return on Total Assets and Return on Common Equity

Return on Total Assets (ROA) measures the rate of return on common stockholders’ investment. ROA can be calculated as net income divided by total assets. Return on Common Equity (ROE) measures the rate of return on common stockholder investments. ROE can be calculated as net income divided by total equity.

Stock split

A stock split is a decision by the company’s board of directors to increase the number of shares that are outstanding by issuing more shares to current shareholders. Company decides to do stock split because the company is lack of fund to expansion project, then they give dividend as stocks. When company makes expansion, there is probability to make higher income. The higher income can generate higher return to the investor.

Debt to equity ratio

Fundamental risk can be known by the emittent financial that is leverage or debt equity ratio. The higher the leverage makes the change of net income cash flow is higher. Leverage will cause debt interest expense, and it will influence the relation of the return.

BI rate

BI rate influence the interest rate. There are two type interest rate which is interest rate asset product (credit) and interest rate liability product (saving, deposit). If BI rate decrease, then the interest rate will decrease. Many credits can be done, and then bank will get more income from it.

 

The return on the market as a whole, called the market portfolio.

The factors influencing the fluctuation of IHSG are:

BI rate

If BI rate increase, the interest rate on the bank will increase as well. It will make people tend to do saving than investment, because they will get higher interest rate from their saving. When the capital market is not attractive anymore, the price of stock market will decrease and as well as the market return. It is as the same as the contrary.

Inflation

Inflation has a relation with the previous factor which is BI rate. Inflation is a condition when there is much money supply in the market and price of goods and services increase significantly. When there is an inflation, BI rate will go higher, it makes saving is more attractive than investing.

Company stocks return activity

Because market return is a bunch of returns from all the companies in capital market, so it is absolutely has relation between stocks return and market return. If the stocks return from the companies is good, it will be resulted in a good market return. It is as the same as the contrary.

Political factor

One of the examples of political factor that influences the market return is general election. If the process of general election can not be successfully reached for example if there is a riot, it might be resulted with the low stock prices that affect the low return.

 

ANALYSIS OF COMPANY BUSINESS PORTFOLIO USING BOSTON CONSULTING GROUP MATRIX (BCG MATRIX)

Boston Consulting Group Matrix (BCG Matrix) is the simplest way to portray a corporation’s portfolio of investments.

It is categorized into one of four types for the purpose of funding decision:

  • Question marks (sometimes called “problem children” or “wildcats”) are new products with the potential for success, but they need a lot of cash for development.
  • Stars are market leaders that are typically at the peak of their product life cycle and are usually able to generate enough cash to maintain their high share of the market.
  • Cash cows typically bring in far more money than is needed to maintain their market share. In this declining stage, of their stage of their
  • Dogs have low market share and do not have the potential (because they are in an unattractive industry) to bring much cash. Dogs should be either sold off or managed carefully for the small amount of cash they can generate.

For the BMRI BCG analysis, I choose one of the products which are the Mandiri Consumer Loan by SBU.

This is the data growth of Mandiri Consumer Loan:

Growth of Mandiri Consumer Loan

 

 

 

 

 

 

 

Sources: http://www.bankmandiri.co.id/

Bank Rating Based on Credit


 

 

 

 

 

 

Sources: http://www.bi.go.id/web/id/

From the data above, we can plot those data in to the BCG graph:

Boston Consulting Group Matrix

 

 

 

 

 

 

 

 

 

 

From the graph, we can analyze that the Mandiri Consumer Loan is including as the product with high market share that is 12.2%. It means that it has a relative competitive position comparing to other business in the same industry. From the loan by SBU, the highest growth is in the micro loan that is 25.3%. Whereas, the lowest growth is in the international loan with the percentage is 3.9%.

 

CONCLUSION

From the analysis above, we can conclude some important points which are:

  • Average return, standard deviation, and beta have a relation.  The standard deviation is often used by investors to measure the risk of a stock or a stock portfolio. The basic idea is that the standard deviation is a measure of volatility: the more a stock’s returns vary from the stock’s average return, the more volatile the stock. Beta is the tendency of a security’s returns to respond to swings in the market. BMRI is a defensive, low beta stock. It is not highly sensitive to market movements, usually lagging when the market rise and yet doing better when the market fall.
  • There are several factors that can influence the fluctuation of the stock return and market return. The factors influencing the fluctuation of BMRI are: company profit, Return on Total Assets and Return on Common Equity, stock split, debt to equity ratio, and BI rate. Whereas factors influencing the fluctuation of IHSG are: BI rate, inflation, company stocks return activity, and political factor.
  • The simplest way to portray a corporation’s portfolio of investments is by using Boston Consulting Group Matrix (categorized into four: question marks, stars, cash cows, dogs). Mandiri Consumer Loan is including as the product with high market share that is 12.2%. It means that it has a relative competitive position comparing to other business in the same industry.

 

REFERENCES

http://202.155.2.90/_pdf/How%20to%20be%20an%20investor_web_2007%20revised.pdf

http://davidmlane.com/hyperstat/A40397.html

http://elibrary.mb.ipb.ac.id/gdl.php?mod=browse&op=read&id=mbipb-12312421421421412-susenowang-571

http://puslit2.petra.ac.id/ejournal/index.php/aku/article/viewFile/16446/16438

http://scriptintermedia.com/view.php?id=3289

http://www.bankmandiri.co.id/

http://www.bi.go.id/web/id/Statistik/Statistik+Perbankan/Statistik+Perbankan+Indonesia/

http://www.investopedia.com

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