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PT MITRA PINASTHIKA MUSTIKA Tbk

Company Profile
PT Mitra Pinasthika Mustika Tbk is a company providing the distribution and finance
plan for the automotive industry. The company has been running since 1988 and finally went
IPO in 2013 with the ticker code of MPMX. The main business of MPMX is the motorcycle
distribution of Honda. Most people recognise MPMX from the MPM Motor dealer that can
easily be found everywhere. Besides, the company also is the distributor of cars with the
brand of Nissan and Datsun. Moreover, the company also provides vehicle rental,
manufacturing lubricants, insurance, and financing plans. MPMX has several subsidiaries
such as PT. Asuransi Mitra Pelindung Mustika, PT. Mitra Pinasthika Mustika Rent and
subsidiaries, and PT. Putra Mustika Prima. Currently, the company has a total outstanding
share of 4,462,963,276 shares. One interesting aspect of MPMX is their dividend. They have
been consistently paying dividends to shareholders in a huge percentage per share, with the
current dividend yield around 13.38% that can be calculated from the annual dividend
divided by the current price. The dividend history also shows a huge percentage of dividend
yield that can be seen below:

Dividend Payment Date Dividend Yield

180 31-May-22 13.38%
115 25-Jun-21 13.86%
90 17-Jun-20 14.17%
480 28-Jun-19 33.10%
105 29-Nov-17 13.27%
25 20-Jun-17 4.12%
10 16-Dec-16 3.55%
17 1-Jul-16 3.71%
7 24-Jun-15 1.01%

The current price of MPMX on May 31, 2022, was 1200. If we average the dividend
yield from 2015 - 2022, we will get an average yield of 11.13% per year. The high dividend
yield makes MPMX so attractive for the investors.

Recent News from MPMX

MPMX or also known as PT Mitra Pinasthika Mustika Tbk, through one of its
subsidiaries, is planning to issue a Medium Term Notes (MTN) III Tahap 1-2022 with the
value of 150 billion rupiah.

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 PT Kustodian Sentral Efek Indonesia (KSEI) announced that Indonesia's JACCS
MPM Finance has published the issuance of MTN MPMF 03X1MF with an emission value
of Rp 150 billion. The trading unit was agreed to be worth Rp 10 billion.

In this corporate action, MPMX together with PT BNI Sekuritas as the guarantor for
the issuance of this MTN set an interest rate of 6.52% per year. With the interest calculation
period, that is 30/360. Thus, interest payments on the three-year MTN will be made every
three months.

The current major shareholder in MPM Finance is JACCS Co ltd, with 60 percent of
shares, whereas the remaining 40% belongs to MPMX. However, it is planned that the
electronic distribution of MTN will be carried out on September 28, 2022. This means that
the first interest payment would be on December 28, 2022, with the maturity date of this debt
securities will be on September 28, 2025.

Valuation Results
Market Price
2022: Rp 1050 (as per 28 September 2022)

Implied Price
Using dividend growth model: Rp 3,664.59

Using P/E Ratio: Rp 1,003.24

Using P/S Ratio: Rp 2,358.39

Using P/FCF Ratio: Rp 1196.47

Interpretation of Result and Recommendation

Dividend Growth Model Valuation
Using the dividend growth model, the calculation shows that MPMX implied price is
Rp 3,664.59. This means that with this method, MPMX is still undervalued as its current
price is Rp 1,050 and the price at the end of 2021 is Rp 1,200, and the model says that the
price should be Rp 3,664.59. Therefore, using the dividend growth model, MPMX is a good
investment opportunity as the price should be higher than the current one.

Relative Valuation
Using the relative valuation method, MPMX price in 2021 is slightly overvalued
using the P/E ratio valuation as the price should be Rp 1003.24. This shows that in term of
profitability potential, MPMX is slightly worse than the competitors. The condition can be
caused because the number of demands for motorcycle is decreasing during the pandemic.
According to Asosiasi Industri Sepeda Motor Indonesia, the domestic demand for
motorcycles in 2020 and 2021 were only around three million and 5 million respectively,

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compared to previous years that can reach six to eight million per year (AISI, 2022).
However, using the P/S and P/FCF ratio valuation, the price is undervalued. These results
happen because the P/S and P/FCF ratio of MPMX is lower than their competitors’ average
ratio. Therefore, MPMX is still a good investment opportunity as their fundamental ratio is
mostly still undervalued and can still rise.

Why the Valuations Have Different Results?

The computation shows that using the dividend growth model, MPMX price is still
undervalued and can still rise. However, using the relative valuation using P/E, P/S, and
P/FCF, MPMX is slightly worse in P/E ratio comparison. The different results happen
because the dividend growth model only considers the dividend aspect without considering
the fundamental performance of the company. Moreover, the dividend growth model values
stock with high dividend yields higher as long as the rate of return is higher than the dividend
growth model. MPMX has a high dividend yield of 13.38%. This increased the first dividend
payment for the calculation (D0) input for the model, which resulted in a higher price (P0).

On the other hand, the relative valuation shows that the MPMX current price is
slightly overpriced by 4.66% using the P/E ratio. This shows that in terms of fundamental
performance (P/E ratio), MPMX is slightly worse than the competitors. However, the P/E
ratio of 11.38x, P/S ratio of 0.36x, and P/FCF ratio of 14.74x is still considered good
informally as P/E and P/FCF ratio under 20x is considered ideal by the market (Zacks, 2014).
Moreover, using the P/S and P/FCF ratio, MPMX has a lower ratio than the average, which
means the stock is undervalued within the ratio.

More detailed calculation can be seen in the excel file attached.

Dividend Growth Model

1. Advantage

Dividend growth model is a method that enables shareholders to measure the intrinsic
value of the company’s shares, expected future growth rate, and required rate of return that is
assessed through primarily using the annual dividend of the company. This method applied to
MPMX, to measure its intrinsic value, can be performed relatively easy since all required
data from the company are accessible on MPMX’ annual financial reports that can be found
on the internet. Hence, determining the intrinsic value of MPMX and inferring if it is a worth-
considering investment using this method is smoothly manageable.

2. Disadvantage

The crucial shortcoming of the dividend growth model is that the accuracy of the
result cannot be fully guaranteed. The calculation of this method is heavily subject to
dividend growth rate which is based on assumptions and projections from historical
dividends. However, there is no guarantee that the company’s dividend growth rate will
experience a consistent increase for a long time. There are many unexpected or expected
factors that can cause the dividend growth rate of a company to become drastically altered,
even with a stable dividend growth rate for years. Company fundamentals, economic trends,

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market conditions, and other factors must be considered and need analysing after calculated
dividend growth models to have an accurate conclusion.

Relative Valuation Method

1. Advantage

As one of the most common forms of valuation of stocks, relative valuation is

considered an ease method since the calculation requires fewer financial data and all needed
data are available online. This method helps shareholders determine the value of an asset of a
company compared to the values assessed by the market that are comparable, which means
they have similar risk/return profiles and fundamental traits. Doing the comparison will allow
shareholders to examine whether the company’s asset continues undervalued or overvalued.

2. Disadvantage

The limitation of relative valuation is comparison errors whether shareholders use not
comparable companies or get biased towards other companies or sectors that lead to
subjective selections. In addition, data that are used to calculate this method is historical data,
past growth rates, which means that assumption on future performance is tremendously hard
to predict because of other factors that have the possibility of changing the company’s growth
rate in the future.

Competitors
The competitors are taken from IDX Fact Book 2019. According to the book, MPMX is
located in sector 9: Trade, Services, and Investment under sub-sector 91: Wholesale (Durable
& Non-Durable Goods).

1. Lautan Luas Tbk PT (LTLS)

2. United Tractors Tbk PT (UNTR)
3. Tigaraksa Satria Tbk PT (TGKA)

The three competitors above are in the same sector and sub-sector with MPMX. Every
company listed in this report is a distributor company. However, the competitors taken do not
have the same specific distribution business line with MPMX. MPMX is a vehicle distributor
while LTLS is a chemical distributor, UNTR is a heavy equipment distributor, and TGKA is
a household equipment distributor.

Ratio Comparison
1. Price to Earnings Ratio (P/E)

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 Price to Earnings Ratio
16,00

14,00

12,00

10,00

8,00

6,00

4,00

2,00

0,00
Average of
P/E MPMX P/E LTLS P/E UNTR P/E TGKA
competitors’ P/E
Seri1 11,38 10,87 7,46 11,6 13,55

MPMX manage to generate EPS accounting 8.79% of the current price. on the other
hand, LTLS manage to have EPS 13% of the current price. UNTR and TGKA manage to
generate 9% and 7% of their current price respectively. This shows that LTLS and UNTR
have a better performance, which results in higher EPS proportion than MPMX, and shows
that MPMX is currently not the best in generating earnings.

2. Price to Sales Ratio (P/S)

Price to Sales Ratio

1,80
1,60
1,40
1,20
1,00
0,80
0,60
0,40
0,20
0,00
Average of
P/S MPMX P/S LTLS P/S UNTR P/S TGKA
competitors’ P/S
Seri1 0,36 0,82 0,35 1,55 0,55

MPMX manage to perform well according to their market capitalization divided by

their revenue (or price divided by revenue per share), with only slightly higher than LTLS,
which shows that MPMX is better than the average performance of the competitors.

3. Price to Free Cash Flow Ratio

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 Price to Free Cash Flow Ratio
70,00
60,00
50,00
40,00
30,00
20,00
10,00
0,00
Average of
Average of competitors’
P/FCF MPMX competitors’ P/FCF P/FCF LTLS P/FCF UNTR P/FCF TGKA
P/FCF (without
LTLS)
Seri1 10,83 32,94 12,34 65,15 7,45 17,22

MPMX manage to generate cash flow from asset around 9.23% of the current price,
only worse than UNTR that can generate cash flow 13.42% of their current price. This means
that MPMX manage their free cash flow better than most of their competitors. The
calculation shows that the P/FCF for LTLS is 65.15, which is really high. This happens
because the cash flow from asset of LTLS is decreasing significantly in 2021, resulting in a
higher P/FCF ratio. However, because the ratio is too high, it can be considered as an outlier
for the average competitors’ P/FCF ratio. Therefore, in comparing the P/FCF ratio, the
calculation omits the P/FCF ratio of LTLS.

Trading Analysis
1. Based on our analysis using the dividend growth model, we have reached a
conclusion that MPMX stock is undervalued. This is due to the fact that the stock's
intrinsic value is less than the market value. Thus, making the firm trade at a discount
price.
2. Using the relative valuation, the firm is also trading at a discount price using the P/S
and P/FCF ratio, because the market price is lower than the intrinsic value. However,
the P/E ratio comparison shows that MPMX is currently trading at a slightly premium
price as their P/E ratio is higher than the competitors’ average P/E ratio.

Characteristics
The most interesting characteristic from MPMX is their dividend. They have been gradually
paying dividends to their shareholders in a huge percentage per share, moreover, with an
average dividend yield of 11.13% per year, MPMX will surely attract a lot of investors. As of
now the report is written, MPMX has a total of 7 subsidiaries that engage the company in
several sectors, be it directly or indirectly, such as vehicle rental, manufacturing of oil
lubricants, general insurance, and financing activities.

Opportunities

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The demand for motorcycles is recovering after pandemic, which is shown from the AISI
data. Per August 2022, the domestic demand has reached three million motorcycles, and is
projected to increase until December. This shows that MPMX as the motorcycle distributors
have an opportunity to distribute more motorcycles and increase their revenue. Moreover, the
electric motorcycle is also currently a trending topic, although the demand is still low
(Dahwilani, 2022). If MPMX can build the supporting component for electric motorcycles
such as the charger station, they can increase the demand and enter the market of electric
vehicles as well.

Potential Risks
On his recent speech, Jokowi, the president of Indonesia Republic expressed his
concern regarding the 2023 economy. He predicted that there would be a recession and urged
the government institutions to prepare Indonesia to face the possibility of inflation. Now, as
stated before on the company profile, PT Mitra Pinasthika Mustika Tbk’s industry is
automotive, which does not belong to defensive industry. If the 2023 recession were to
happen, people would hold their spending in the automotive industry which could result in
the decline of sales and revenue from this company.

Conclusion
In conclusion, MPMX stock price can be considered in a discount using the dividend
growth model valuation as the calculation shows that intrinsic value is still higher than the
actual market value. The stock is considered undervalued using this method because the
company pays a high amount of dividend each year, around 11.13% average dividend yield
per year. This increases the value of the stock in the model. The method is acceptable as
dividend is an important aspect for the investor in deciding their portfolios. However, it
should be noted that this method itself is not sufficient to decide that MPMX is a good
company to invest overall.

To support the dividend growth model, the relative valuation is used. By comparing
MPMX with the competitors in the same sector, the company’s performance can be
evaluated. The results shows that MPMX is only slightly worse in P/E ratio, which mean
their profit opportunity is currently slightly worse than the competitors. This can be explained
from the pandemic that lower the demand for motorcycles distribution. However, the demand
is recovering and MPMX is projected to distribute more motorcycles, which can lower their
P/E ratio as well. Using the P/S and P/FCF valuation, the company has lower ratio than the
competitors’ average for both ratios. This shows that in term of equity needed to generate
revenue (P/S ratio) and cash (P/FCF ratio), MPMX is better than the competitors in the same
sector. Therefore, MPMX can be considered as a good investment plan for the current
situation as the stock is still undervalued because they are the favourite in term of dividend
payment and have better fundamental performance than the competitors reflected from the
valuation ratios.

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 Works Cited

Idx Fact Book 2019 - PT Bursa Efek Indonesia. https://www.idx.co.id/media/7717/fb2019-

halaman.pdf.

Industri Jamu & Farmasi Sido Muncul - PT Bursa Efek Indonesia.

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nfo_JSX/Jenis_Informasi/01_Laporan_Keuangan/02_Soft_Copy_Laporan_Keuangan//
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PT Mahaka Media Tbk. Dan Entitas Anak - PT Bursa Efek Indonesia.

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