Fintech Start-up Valuation (Financial and Intellectual Capital)

Abdurrahman1*, Frastio Oktaviano Amchory2

1,2
Faculty of Economic and Business, University of Esa Unggul, Jakarta, Indonesia
*Corresponding Author

ABSTRACT

This study calculates the appropriate valuation for a fintech company. This research is quantitative research with a literature study
method and short history of company financial report as data reference in research. The valuation method used is a combination of
the Damodaran method and The First Chicago method with the Value-Added Intelligent Coefficient (VAIC TM) method as a reference
for company performance in making future operating profits and the Market Value Added (MVA) method as an estimator of the
company’s intellectual capital value. The result of this research is obtained company’s value of IDR. 968,829.010,546. This is a
positive valuation result because the company's value is greater than the total value of its assets. According to The MVA Method, the
company’s intellectual capital value of IDR. 238,901,545,427 which is this value will change dynamically depending on market
conditions if later company’s value as a reference for the offered price to the public through Initial Public Offering (IPO).

Keywords: Fintech Valuation, The Damodaran Method, The First Chicago, Value Added Intelligent Coefficient,

Market Value Added.

Introduction:
In today's modern era, information and communication technology is developing very rapidly. The
development is considered a solution for the existing people’s problems. The role of information
technology in everyday life is as a support for people's activities that can answer the demands of
faster, easier, cheaper, and save more time work. The development of this technology is also
utilized in all aspects of activities in human life, one of which is in the aspect of online financial
service activities or better known as Financial Technology or abbreviated as Fintech. Otoritas Jasa
Keuangan (2017) so that Fintech is a renewal of the financial services industry that utilizes the use
of technology. Fintech products are generally in the form of a system built to run specific financial
transaction mechanisms, to speed up and facilitate aspects of the financial services they provide.
There are 103 fintech companies registered with OJK as of January 2022.
One of the fintech start-up companies in Indonesia is PT Pasar Dana Pinjaman or known as
Danamas. Danamas is a subsidiary of PT Sinar Mas Multiartha Tbk which is the first financial
technology (fintech) company that has obtained a business license for information technology-based
lending and borrowing services (peer-to-peer lending / P2P) based on a decision letter from Otoritas
Jasa Keuangan (OJK) No. KEP-49/D.05/2017 dated 6 July 2017. The products offered by the
company are logistics company loans, cash loans, factoring, Micro, Small, and Medium Enterprise
(MSME) Farmers and Breeders, Multifinance, and credit sales. Danamas has a huge business
opportunity as a funding solution for businesses that want to develop, especially information
technology & telecommunications-based businesses. Danamas currently has total assets of IDR.
729,927,465,119 with company services covering 33 provinces in Indonesia and obtained ISO
27001:2013 certificate for Information Security Management System (ISMS) on 11 September
2020.
A big company such as Danamas does not rule out the possibility of being listed on the Indonesia
Stock Exchange (IDX), because this step will benefit Danamas as an Information technology-based
lending and borrowing company that requires trust for both lenders and borrowers. In addition,
companies will have the opportunity to gain access to funding from the stock market, a well-known
corporate image, and lower taxes. Fintech companies get support from the Government, Otoritas
Jasa Keuangan (OJK), and Bank Indonesia (BI) which was conveyed by the Minister of Finance at
the Indonesia Fintech Summit (IFS) 2021, this is based on statistical data on Fintech Lending
published by Otoritas Jasa Keuangan (2021), In December 2019 the number of accumulated loans
increased by 259.56 % YoY from IDR 22,666,069,500,288 to IDR 81,497,510,828,317, in 2020 the
number of accumulated loans increased 91.3% YoY from IDR 81,497,510,828,317 to IDR
155,902,554,218,280 and until the end of 2021 the accumulated loan amount increased 89.8% to
IDR. 295,852,575,285,377. With the massive increase in the accumulation of fintech loans and line
with the development of the fintech business, the Government hopes that fintech companies will be
able to go on the stock exchange to attract foreign and local investors in the Indonesian stock
market.
Judging from the rapid development of the fintech business and support from the Government, this
is a big opportunity for Danamas to take advantage of listing on the Indonesia Stock Exchange so
that Danamas will get capital funding from releasing shares in the public which can be used to
expand Danamas’s p2p lending financing. Even achieve financing that corporate lenders cannot
achieve so that Danamas can expand its business market share. However, to be able to find out how
much the company value is suitable for Danamas, we need to calculate its valuation. Because
according to Damodaran (2012) valuation is a process that connects risk and profit to determine
how valuable an asset is.
Subroto & Sukarno (2019) conducted a study and analysis of the valuation of Venture B which is a
subsidiary of PT Telekomunikasi Indonesia Tbk. The method used to calculate the valuation was
combining the Damodaran and The First Chicago methods. The result obtained with this method
was Venture B can become a large and feasible company for PT Telekomunikasi Indonesia Tbk if
Venture B is given investment funds by PT Telekomunikasi Indonesia Tbk, even in the worst-case
venture B company value will exceed the total equity invested by PT Telekomunikasi Indonesia
Tbk.
Likewise, Reinfeld (2018) calculated the valuation of an online marketplace start-up company,
Airbnb. The method used to calculate the valuation was combining the Venture Capital Method and
The First Chicago Method, which results in an appropriate firm value for an Airbnb company of
$38.7 billion or $131 per share with 294 million shares outstanding.
In the research Azka & Faturohman (2020) they evaluated Venture V which is a subsidiary of PT
Telekomunikasi Indonesia Tbk. The method used to solve the problem in this paper is a risk-based
new venture valuation technique. The result shows that Company V is in milestone 2, with
approximately the valuation is 83,16 billion IDR. If market validation is complete and normal risk
is applied, the valuation of Company V will reach 568,23 billion IDR starting from year 3, month 5.
Damodaran (2009) conducted studies and valuation analyses for start-up companies. His research
was to evaluate secure mail and healthy meals companies which were start-up companies so that to
calculate the company's valuation, we could not use the usual method used to evaluate
large/mature/open companies but using the DCF method which has been adapted for the problems
and shortcomings in a start-up company. It was found that secure mail companies should add $30
million from investors to reduce the possibility of company failure so that company can stay afloat
and healthy meals company could sell their company at an appropriate company value of $632,212.
Based on the problems above, the purpose of the research to be achieved is to find an appropriate
company valuation before the company is listed on the Indonesia Stock Exchange. In this study, the
author makes PT Pasar Dana Pinjaman (Danamas) because considering Danamas is the first fintech
startup in Indonesia owned by the largest conglomerate company, PT Sinar Mas Multiartha Tbk and
also fullfill the requirement to be listed in Indonesian Stock Exchange (IDX). Danamas has also
been registered by OJK and listed as the organizer of Inovasi Keuangan Digital (IKD).
Methods:
The methodology used in this study is using a quantitative approach. The quantitative approach is
done by calculating the value of the company with a combination of the Damodaran and The First
Chicago method with Value Added Intellectual Coefficient (VAICTM) as company performance
reference to obtain estimated profit and Market Value Added (MVA) as intellectual capital
measurement. All data available for analysis, are collected from secondary data. Secondary data is
obtained through the company's internal financial statements and holding company’s financial
statements that have gone public. The company's financial statements used are historical data on the
Danamas company's financial statements from 2018-2020 which are obtained from the Danamas
website that have been audited. For the holding company’s financial statements, using the financial
statements of PT Sinarmas Multi Artha Tbk are obtained from the Indonesia Stock Exchange. The
following steps will be taken to calculate the valuation of Danamas:
Figure 1: Valuation Step Flowchart

START

History of Balance Sheet

History of Realized Loan, Paid Off Loan,
Holding
Revenue, VAIC Score, Increased Asset,
Company (SMMA), Risk-free
Depreciation, Salary-Benefit Expenses &
Interest Rate, IDX Composite
Book Value Danamas 2018-2020
Price 2018-2020

The First Chicago Method

Estimating Revenue For Estimating Revenue For
Estimating Revenue For Estimating Discount Rate
Next 5 years (Normal Next 5 years (Best
Next 5 years (Worst (WACC)
Condition) Condition)
Condition)

Estimating Operating Profit Estimating Operating Profit

Estimating Operating Profit
Danamas For Next 5 Years
with VAIC Method (Worst
Condition)
Danamas For Next 5 Years Danamas For Next 5 Years
Inflation Growth
with VAIC Method with VAIC Method (Best Discount Rate
Rate 2017-2020
(Normal Condition) Condition)

Estimating Cash Flow Estimating Cash Flow

Estimating Cash Flow
Danamas For Next 5 Years Danamas For Next 5 Years
Danamas For Next 5 Years
(Normal Condition) (Best Condition)
(Worst Condition)

Estimating Terminal Value

Estimating Terminal Value
Estimating Terminal Value Danamas (Normal
Danamas (Best Condition)
Danamas (Worst Condition) Condition)

Present Value Danamas Present Value Danamas

Present Value Danamas
(Normal Condition) (Best Condition)
(Worst Condition) Weighting

Danamas
Danamas Danamas
Valuation Danamas
Valuation Valuation (Best
(Normal Valuation
(Worst Condition)
Condition)
Condition)
 END

Source : Author (2022)

Result and Discussion:
Danamas Valuation (Normal Condition)
The first thing to do in calculating the valuation using the Damodaran method is to estimate the
future Free Cash Flow from Danamas. The bottom-up approach will be used in estimating Free
Cash Flow because this approach is more suitable for the company whose income will be estimated
based on company assets owned. The bottom-up method approach is compatible with the VAIC TM
method which will be used to estimate the company's operating profit and this method will prevent
the overestimation of cash flows.
a) Estimated Free Cash Flow
1) Investment Capacity
Currently, the amount of investment owned by Danamas is IDR 729,927,465,119 with a
composition of 66.66% owned by PT Sinar Mas Multiartha Tbk as a holding company and
33.34% owned by Itochu Corporation. The company's capital is IDR 722,773,113,621
(99.02% of the total investment) and the company's debt is IDR 7,154,351,498 (1.08% of the
investment). This company's debt is debt from the company's operating activities, namely
taxes payable, accrued expenses, finance lease payable, long-term employee benefits payable,
and other operating activities payable so that there is no interest on the loan. The amount of
investment that will become a loan is IDR 655,734,215,797 with a loan capacity that can be
realized in a year is IDR 2,347,259,851,202 (2020).
2) Revenue
Danamas in a year can realize a loan of IDR 2,347,259,851,202 in 2020. Since 2017 realized
loans of Danamas had grown an average of 25% with an average loan performance of 89.74%
and an average Danamas revenue of 2.5% of paid loans. Referring to the historical data for 3
years of Danamas, it is obtained that Danamas's revenue expectations for the next 5 years are
as follows.
Table 1: Estimated Danamas Revenue for Next 5 years
2021 (IDR) 2022 (IDR) 2023 (IDR) 2024 (IDR) 2025 (IDR)
Estimated 2,934,074,814,0 3,667,593,517,5 4,584,491,896,87 5,730,614,871,0 7,163,268,588,87
Realized Loans 03 03 9 99 3
(Growth
 Average 25%)
Estimated Paid
Loans (Paid
Loans 2,633,119,935,3 3,291,399,919,2 4,114,249,899,03 5,142,812,373,7 6,428,515,467,24
Performance 84 29 7 96 5
Average
89.74%)
Revenue
(2.5%
Average 65,900,404,775 82,375,505,969 102,969,382,461 128,711,728,076 160,889,660,096
from Paid
Loans)
Source: Processed Data by Author

3) Operating Profit
The estimated Danamas's operating profit for the next 5 years will be projected using the
average value of the intellectual capital performance score and economic performance of
Danamas from 2018 to 2020 using the VAICTM method. The formula for finding the VAICTM
value is as follows:
VAICTM = ICE + CEE (1)
VAICTM = HCE + SCE + CEE
VA VA−HC VA
VAICTM = + +
HC VA CE
Where,

VA = Value Added
HC = Salary-Benefit Expenses
CE = Book Value
The following is Danamas average VAICTM score from 2018 to 2020 in Table 2
Table 2: History of Danamas VAICTM Score and Its Average
2018 2019 2020
VA Rp 24,193,201,541 Rp 26,505,423,917 Rp 33,401,569,614
HC Rp 6,790,574,103 Rp 20,757,696,191 Rp 27,701,780,516
CE Rp 727,576,204,593 Rp 724,286,821,864 Rp 729,927,465,119
VAICTM 4.32 1.53 1.42
Avg 2.42
Source: Processed Danamas Data History
According to Pulic in the research of Sumedrea (2013) stated that the normal value of the
VAICTM index is in numbers 1 – 3. In 2018 the Danamas VAICTM value was 4.32 a category
above the normal value, due to the increase in multipurpose loans for permanent employees of
companies that collaborated with Bank Sinarmas in a situation where the number of Danamas
human resources was still low. In 2019 the VAIC TM value decreased to 1.53 because this year
the company expanded by opening 12 branches, the increase in profit was still smaller than
the increase in the number of HR so the VA value increased slightly, but the HC level
 increased much larger and in 2020 revenue and Danamas profit decreased due to the
pandemic, but the company's VAICTM performance was successfully maintained at the normal
limit value of 1.42 with the increase in VA dominated by the increase in HC value.
Then the VAICTM value from the 3 years was calculated on average and obtained an average
value of 2.42. After getting the average value of VAIC TM, then projecting the amount of salary
and employee benefits and their annual growth for the next 5 years. The author assumes a
large growth in salary and benefit of 25%/year following the growth in the size of the loan
that can be realized every year. The following is a projection of the value of Danamas's salary
and benefits for 2021-2025.

Table 3: Estimated Salary and benefit Danamas 2021-2025

2021 (Rp) 2022 (Rp) 2023 (Rp) 2024 (Rp) 2025 (Rp)
Salary and
Benefits 27,616,126,966 34,520,158,708 43,150,198,385 53,937,747,981 67,422,184,977
Expenses
Source: Processed Danamas Data History
Furthermore, the company had an annual asset expenditure budget of Rp 3,000,000,000 per
year from the company's asset expenditures that had been issued by Danamas. Danamas's
annual budget will be fixed, but the estimated value of Danamas's annual budget will increase
according to the inflation rate that the writer has set from the average inflation rate of
Indonesia from 2017-2020 of 2.78%. The following is the estimated budget for Danamas for
the next 5 years.
Table 4: Estimated Asset Expenditure of Danamas 2021-2025
2021 (Rp) 2022 (Rp) 2023 (Rp) 2024 (Rp) 2025 (Rp)
Estimated
Asset 3,000,000,000 3,082,500,000 3,167,268,750 3,254,368,641 3,343,863,778
Expenditure
Source: Processed Danamas Data History
From the estimated asset expenditure, we will be able to estimate the value of depreciation per
year. To get the depreciation value, the method used is the straight-line method where the
residual value is estimated at 10% with a useful life of 4 years because the assets are in the
form of group 1 tangible assets according to Law No. 36 of 2008.
Table 5: Estimated Depreciaton of Danamas 2021-2025
2021 (Rp) 2022 (Rp) 2023 (Rp) 2024 (Rp) 2025 (Rp)
Depreciation 2,250,660,154 2,312,802,737 3,237,552,737 4,187,733,362 4,835,902,469
Source: Processed Danamas Data History
After getting the depreciation value, the next step is to estimate the book value of the
company from the estimated value of the company's assets for the next 5 years by adding up
 the value of assets in the previous year with the asset’s expenditure in this year minus the
depreciation in this year. The following is the estimated value of the company's assets from
2021-2025.
Table 6: Estimated Book Value of Danamas 2021-2025
2021 (Rp) 2022 (Rp) 2023 (Rp) 2024 (Rp) 2025 (Rp)
Asset Value
729,927,465,1 730,676,804,9 731,446,502,2 731,376,218,2 730,442,853,52
Previous
19 65 28 42 1
Year
Assets
3,000,000,000 3,082,500,000 3,167,268,750 3,254,368,641 3,343,863,778
Increase
Depreciatio
2,250,660,154 2,312,802,737 3,237,552,737 4,187,733,362 4,835,902,469
n
Company’s 730,676,804,9 731,446,502,2 731,376,218,2 730,442,853,5 728,950,814,83
Asset Value 65 28 42 21 0
Source: Processed Danamas Data History
After getting the average value of VAICTM, the estimated value of salary-benefits expenses,
the estimated value of added assets, the estimated value of depreciation expense, and the
estimated value of the company's assets. then we can get the future value of Danamas's VA
(Value Added) for the next 5 years along with the estimated operating profit of Danamas by
substituting the data that has been obtained into the VAIC TM formula. The following is the
value of VA and operating profit of Danamas 2021-2025 in Table 7.
Table 7: Projected VA and Operating Profit of Danamas 2021-2025
2021 (Rp) 2022 (Rp) 2023 (Rp) 2024 (Rp) 2025 (Rp)
VA 64,462,249,23 98,757,814,17
51,936,297,962 79,872,360,125 121,796,713,890
7 5
Salary-Benefits 34,520,158,70 53,937,747,98
27,616,126,966 43,150,198,385 67,422,184,977
Expenses 8 1
Asset Increae 3,000,000,000 3,082,500,000 3,167,268,750 3,254,368,641 3,343,863,778
Depreciation 2,250,660,154 2,312,802,737 3,237,552,737 4,187,733,362 4,835,902,469
Operating Profit 24,546,787,79 37,377,964,19
19,069,510,842 30,317,340,254 46,194,762,666
2 2
Source: Processed Danamas Data History
Danamas operating profit will be estimated to grow from 2021 by Rp 19,069,510,842 to Rp
46,194,762,666 in 2025 if the company can maintain the VAICTM value of 2.42.
4) Tax
The tax percentage rate used is 25% according to the provisions based on article 17 section 1
part b of Law No. 36 of 2008 concerning income tax. The following is the estimated amount
of Danamas tax and profit after tax for the year 2021-2025.
Table 8: Estimated Tax and Profit After Tax of Danamas 2021-2025
2021 (Rp) 2022 (Rp) 2023 (Rp) 2024 (Rp) 2025 (Rp)
Operating 19,069,510,842 24,546,787,792 30,317,340,254 37,377,964,192 46,194,762,666
 Profit
Tax (25%) 4,767,377,710 6,136,696,948 7,579,335,063 9,344,491,048 11,548,690,667
Profit After
14,302,133,131 18,410,090,844 22,738,005,190 28,033,473,144 34,646,072,000
Tax
Source: Processed Danamas Data History
5) Additional Investment
Danamas in its operations for the next 5 years has a budget plan to always update equipment,
software, and other business supports with a budget of Rp 3,000,000,000 where the value is
assumed to increase along with the inflation rate used, which is 2.78%. Then we can
determine the value of free cash flow with the formula below.
FCFt = OCBt – It (2)
where,
FCFt = Free Cshflow on t Periode
OCBt = Opertaing Cashflow t Periode
It = Invesment t Periode

Table 9: Estimated Free Cashflow of Danamas 2021-2025

2021 (Rp) 2022 (Rp) 2023 (Rp) 2024 (Rp) 2025 (Rp)
Profit After Tax 14,302,133,13 18,410,090,84 22,738,005,19 28,033,473,14 34,646,072,00
1 4 0 4 0
Dep. 2,250,660,154 2,312,802,737 3,237,552,737 4,187,733,362 4,835,902,469
OCBt 16,552,793,28 20,722,893,58 25,975,557,92 32,221,206,50 39,481,974,46
5 1 7 5 8
Invesment (It) 3,000,000,000 3,082,500,000 3,167,268,750 3,254,368,641 3,343,863,778
FCF 13,552,793,28 17,640,393,58 22,808,289,17 28,966,837,86 36,138,110,69
5 1 7 5 0
Source: Processed Danamas Data History
b) Estimating Discount Rate
The discount rate that will be used in this valuation is the value of the Weighted Average Cost of
Capital (WACC) from PT Sinar Mas Multiartha Tbk which acts as the holding company and the
largest provider of capital from Danamas so that the expected rate of return obtained by PT Sinar
Mas Multiartha Tbk as a provider of capital Danamas is at least as big as its cost of capital. The
weight of debt and equity is determined based on the capital structure of PT Sinar Mas
Multiartha Tbk in 2020.
Table 10: Capital Structure PT Sinar Mas Multiartha Tbk
Capital Structure 2020 (Rp. Million) Weight
Short Term Debt 33,253,110 55.05%
 Long Term Debt 4,228,652 7.00%
Total Debt 37,481,762 62.05%
Equity 22,922,244 37.95%
Total Company Capital 60,404,006 100%
Source: Financial Report SMMA 2020
The cost of debt is estimated based on the average data by weighting the interest on short-term
and long-term debt of PT Sinar Mas Multiartha Tbk. The following is the average weighting of
interest on short- and long-term debt of PT Sinar Mas Multiartha Tbk.
Table 11: Cost of Debt PT Sinar Mas Multiartha Tbk.
Debt Interest Rate Weight
Short Term
Bank Loan 12.75% 9.06%
Deposit and Deposit
5.99% 90.94%
from Other Bank
Cost of Short Term Debt 6.60% 100%
Long Term
Securities 12.05% 100%

Cost of Long Term Debt 12.05% 100%

Source: Financial Report SMMA 2020
The cost of equity is calculated using the Capital Asset Pricing Model (CAPM) method with the
formula 𝑘E = 𝑟f + 𝛽 𝑥 (𝑟m – 𝑟f), the value of rf (risk-free interest rate) uses data on the average
interest rate since Danamas was established, the value of 𝛽 (Beta) uses the slope of the annual
data from the historical stock price of PT Sinar Mas Multiartha Tbk and IDX Composite price
since Danamas was founded and the value of 𝑟m (Market Risk Level) uses growth IDX
Composite price since Danamas was established.
The following is an estimate of the cost of equity.
Table 12: Cost of Equity PT Sinar Mas Multiartha Tbk
Description Data
Risk-free Interest Rate (𝑟f) 4.30%
Beta (𝛽) 0.005433
Market Risk (𝑟m) -1.98%
Premium Risk (𝑟m – 𝑟f), -6.28%
Cost of Equity 4.27%
Source: Financial Report SMMA 2020
Then we can see WACC calculation in Table 13 as follows.
Table 13: WACC PT Sinar Mas Multiartha Tbk
Description Weight Cost Weighted Cost
Cost of Short Term Debt 55.05% 6.60% 3.63%
Cost of Long Term Debt 7.00% 12.05% 0.84%
Cost of Equity 37.95% 4.27% 1.62%
Cost of Capital (WACC) 6.10%
 Source: Financial Report SMMA 2020
PT Sinar Mas Multiartha’s cost of capital is 6.10% and is assumed to be constant for the next 5
years.
c) Estimating Terminal Value
To estimate the terminal value of Danamas, it is assumed that cash flow growth will continue to
grow with the concept of The Perpetuity Growth approach. This concept assumes that economic
growth is in line with population growth, where the increasing population of people in a country
certainly requires consumption and resources to survive which continues to grow. With this
approach, the growth rate is assumed to use the inflation rate of Indonesia as the country where
Danamas operates its company. The inflation rate uses the average inflation rate from 2017 since
Danamas started operating, which is 2.78%. The discount rate will use the value of the cost of
capital that we have calculated with a WACC of 6.10% and the amount of free cash flow for the
5th year of Rp 36,138,110,690. The following is the estimated of the Danamas terminal value.
FCF n (1+ g)
Terminal Value= (3)
(r−g)
Table 14: Estimated Danamas Terminal Value
Description Value
Free Cashflow on 5th year (FCF5) IDR 36,138,110,690
Inflation Growth (g) 2.78%
Dsicount Rate (r) 6.10%
Danamas Terminal Value IDR 1,118,757,535,152
Source: Financial Report SMMA 2020
Danamas terminal value is Rp 1,118,757,535,152 which means this is the value of Danamas's
current cash flows in the future from all future cash flows assuming that Danamas's cash flows in
year 5 are Rp 36,138,110,690 with inflation growth and the discount rate remaining as it is
today.
d) Danamas Present Value
After estimating free cash flow, discount rate and terminal value, the next step is to calculate
Danamas's valuation by adding up the entire estimated value of free cash flow with the estimate
Danamas's terminal value. The following is the result of Danamas's valuation in Table 15.
Table 15: Estimated Danamas Valuation
Description 2021 (Rp) 2022 (Rp) 2023 (Rp) 2024 (Rp) 2025 (Rp)
22,808,289,17
Free Cashflow 13,552,793,285 17,640,393,581 28,966,837,865 36,138,110,690
7

Terminal Value 1,118,757,535,152

22,808,289,17
Total Cashflow 13,552,793,285 17,640,393,581 28,966,837,865 1,154,895,645,842
7
Present Value of 12,773,603,474 15,670,306,924 19,096,182,60 22,858,069,711 858,945,926,630
 Total Cashflow 3

Danamas
929,344,089,342
Valuation

Source: Processed Danamas Data History

Danamas's valuation is Rp 929,344,089,342 where this value needs to be adjusted. The
adjustment of Danamas's valuation will be simulated using the First Chicago method.
The First Chicago Method
The previous valuation calculation is the calculation in the normal scenario where the worst and
best scenarios of Danamas will be calculated as follows.
a) Worst Scenario
The worst-case scenario is assumed that the realized loan only grows by 10%, with a paid loan
rate of 79.74% and of 2.18% of the total paid loan. This percentage is considered the lowest
percentage that has happened to Danamas since Danamas was founded. Then the VAIC TM value
used is 1.42, which is the smallest performance value that Danamas has ever produced with
growth in salary-benefit expenses of 10% which is assumed to be the same as the growth in
realized loan. For the amount of additional investment, depreciation, the value of Danamas
assets, and tax rate will be the same as in the normal scenario. Except that in the worst scenario,
Danamas generates gross profit in losses so that the income has not been taxed.
The discount rate and growth rate used are the same as in the normal scenario because in this
worst-case scenario it is assumed that the state of the holding company, market conditions, and
the economic environment of Danamas are considered the same, only that Operational Danamas
works in the worst-case scenario. The calculation steps carried out in the worst scenario are the
same as the calculation steps in the normal scenario so that the value of the Danamas terminal in
the worst scenario is Rp 9,995,965,306. Then the cash flow expectations and the value of
Danamas's valuation in the worst conditions will be shown in the Table below.
Description 2021 (Rp) 2022 (Rp) 2023 (Rp) 2024 (Rp) 2025 (Rp)
Free Cashflow -950,281,462 -671,900,028 -367,101,406 -35,890,112 321,597,635
Terminal Value 9,955,965,306
Total Cashflow -950,281,462 -671,900,028 -367,101,406 -35,890,112 10,277,562,940
Present Value of (895,646, (596,861, (307,354,7 (28,321,30 7,643,8
Cashflow 996) 947) 27) 6) 68,825
Danamas
5,815,683,850
Valuation
Table 16:
Estimated Cashflow and Danamas Valuation 2021-2025 in Worst Case Scenario
Source: Processed Danamas Data History
b) Best Scenario
The best scenario is assumed that the realized loan grows to 48.57%, with a percentage of the
paid loan of 98.96% and revenue of 2.71% of the total paid loan. This percentage is considered
 the highest percentage that has happened to Danamas since Danamas was founded. Then the
VAICTM value used is 4.32, which is the largest performance value that Danamas has ever
produced with a growth in salary-benefit expenses of 48.57% which is assumed to be the same as
the growth in the realized loan. For the amount of the additional investment, depreciation, the
value of Danamas assets and the tax rate will be the same as in the normal scenario.
The discount rate and growth rate used are the same as in the normal scenario because in the best
scenario is assumed that the holding company, market conditions, and the economic environment
of Danamas are considered the same, only that Operational Danamas works in the best scenario.
The calculation steps carried out in the best scenario are the same as the calculation steps in the
normal scenario so that the value of the Danamas terminal in the best scenario is Rp
7,269,061,162,176. Then the expected cash flow and the value of Danamas's valuation in the best
conditions will be shown in the Table below.
Table 17:
Estimated Cashflow and Danamas Valuation 2021-2025 in The Best Case Scenario
Description 2021 (Rp) 2022 (Rp) 2023 (Rp) 2024 (Rp) 2025 (Rp)
Free
55,732,006,337 82,563,891,992 120,068,441,521 170,428,163,826 234,805,244,779
Cashflow
Terminal 7,269,061,162,176
Value
Total
55,732,006,337 82,563,891,992 120,068,441,521 170,428,163,826 7,503,866,406,956
Cashflow
Present Value
52,527,809,931 73,343,121,424 100,526,999,917 134,486,852,439 5,580,950,545,130
of Cashflow
Danamas 5,941,835,328,841
Valuation
Source: Processed Danamas Data History
c) Final Valuation
From three Danamas scenarios, the following valuation results are obtained.

Table 18: Danamas Valuation From Each Scenarios

Scenario Valuation Value
The Worst Rp 5,815,683,850
Normal Rp 929,344,089,342
The Best Rp 5,941,835,328,841
Source: Processed Danamas Data History
To find the final valuation result of Danamas, the probability of each scenario must be estimated.
The probability of the best-case scenario is 0.1 because to get results like the best-case scenario,
Danamas has to work extra hard every year. The probability of the normal scenario is 0.4 and the
worst scenario is 0.5 because these two scenarios are very likely to happen. The worst-case
scenario is 0.1 higher than the normal scenario because the worst scenario has more possibility to
 occur than the normal scenario, because considering the results of the average performance of
Danamas in the VAICTM value for 3 years, which is 2.42 while 2 out of 3 years Danamas's
VAICTM value is below its average value, which is 1.53 in 2019 and 1.42 in 2020. Following is
the Final Results of the Danamas Valuation.
Danamas Valuation = Probability Worst Scenario x Worst Scenario Valuation +
Probability Normal Scenario x Normal Scenario Valuation +
Probability Best Scenario x Best Scenario Valuation
(4)
= (0.5 x Rp 5,815,683,850) + (0.4 x Rp 929,344,089,342) +
(0.1 x Rp. 5,941,835,328,841)
= Rp 968,829,010,546
The Danamas valuation is Rp 968,829,010,546 which this valuation is greater than the book
value of Danamas, which is Rp 729,927,465,119, meaning that Danamas has good performance
and company prospects.
Market Value Added as Intellectual Capital Measurement
According to Brigham & Houston in Udiyana et al (2022) Market Value Added (MVA) is one of
the methods to measure intellectual capital where MVA is the difference between market value and
company book value. The market value of Danamas is assumed to be the calculated valuation value
of IDR 968,829,010,546 and the current book value of Danamas is IDR 729,927,465,119. So, we
can get the MVA value as follow.
MVA = Company Market Value – Company Book Value (5)
= IDR 968,829,010,546 - IDR 729,927,465,119
= IDR 238,901,545,427
This MVA value will change dynamically depending on market conditions if the calculated value of
Danamas's valuation becomes the price offered to the public/Initial Public Offering (IPO).
Conclusion:
Conclusion
Based on the results of the valuation, Danamas has a value of IDR 968,829.010,546. This is a
positive valuation result because the company's valuation is greater than the total value of its assets.
This estimation result is considered from 3 scenarios in The First Chicago method, each scenario
whose valuation is calculated using the Damodaran method and projected operating profit value for
the next 5 years is estimated using the Value-Added Intellectual Coefficient (VAIC TM) method.
Danamas intellectual capital valuation is IDR 238,901,545,427 obtained from the Market Value
Added (MVA) method, but this intellectual capital valuation value is dynamic depending on market
conditions if later the calculated Danamas valuation becomes the price offered to the public/Initial
Public Offering (IPO).
Research Limitation
The limitation of this research refers to the weakness of the research which in the process of
calculating the valuation uses an estimated value which is not necessarily happening, so in
determining the value of the company's cash flow and investment each year in the future cannot be
done in detail, only using logical approaches that are capable of being carried out by the company.
The valuation method used refers to the company historical financial data, if it is used for startup
companies that do not have historical financial data, it can cause overestimation because there is no
reference to the company's previous financial data. Then the next limitation is in determining the
value of intellectual capital which value is temporary and dynamic, the value will change according
to the price that will be determined by the market if the value is used as the reference value at the
time of the Initial Public Offering (IPO).
Suggestions for Further Research
Further research can add more detailed and complex methods of intellectual capital valuation so that
the assessment of the company's intellectual capital can be closer to the real intellectual capital
value owned by the company. Further research can expand research to other companies apart from
fintech companies so that they can get a comparison of the results of whether this method can be
suitable with other company fields.
Managerial Implication
This study aims to obtain the appropriate value of the company if the company is listed on the
Indonesia Stock Exchange (IDX) so that the company can get new funding sources to develop the
company, have a good image of the company, and get tax incentives which in the end the company
can have more competitiveness and longer business continuity. Therefore, the managerial
implication that can be put forward to maintain and even increase the value of the company is to
make the estimated values in each scenario of the company's condition in the Value Added
Intellectual (VAICTM) method become the company's reference value in maintaining performance, if
in the future the company runs according to the normal scenario, consistently 5 years then we will
know the amount of company value generated, as well as the worst and best scenarios, we will
know how bad the company value is if the company's performance goes like the worst scenario and
we will also know how good the company's value is if the company runs like best scenario.
However, it is necessary to notice again the valuation of each of these scenarios when the state of
the country with an assumed inflation rate of 2.78% and a discount rate of 6.10% because if the
inflation rate and/or discount rate in the future change, the company's valuation will also change.
This is an important consideration for companies that will be listed on the stock exchange to
 consider the global condition of the world, the economic condition of the country where Danamas's
business takes place, and the state of the stock market in that country.
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(Blake, 2016; Bursa Efek Indonesia, 2015; Danamas, 2022; Estiyanti & Rusmadewi, 2018; Fijałkowska, 2014;
Maryam Valizadeh Morady, 2013; Montani et al., 2020; Sinarmas Multiartha, 2022; Ulum, 2013)