Beta of Equity Aneka Tambang Tbk

Beta of Equity
Beta is the sensitivity of the stock return to the return of the market portfolio. In another words, Beta is used to measure the change in stock return when there is a change in the market return. And in this company the Beta was calculated as 1.32527437 with the market using LQ45. Also, in correspondence to the IHSG index, the Beta is 1.56238798. That means if the market return in IHSG is increased by 1% then stock return would increase by 1.3% for LQ45, and for the IHSG the increase of 1% of market return would increase stock return of the company by 1.5%.
So this company is quite the right place for risk seeker to invest their money in, since it could be classified as an aggressive stock company (Beta more than 1.0- average) but for those that does not enjoy risk or want to play it safe, it would be best not to put all of your money in this company, Although, a good investor would invest not only in one place but in several places. So in other words, do not put all your money in one basket since you might lose them and be left with nothing.
Even given Beta 1.5 it literally means that every movement in market is followed by stock return. There are some cases that we can see in the scatter plot showing that stock return has e opposite movement from the market return. When the market is increasing because special events that occurred that day, the stock return was increasing with the value greater than 1.5 and vice-versa.
Hypothesis testing of regression
Based on CAPM (Cost Asset Pricing Model), risk premium equal to the stock’s beta times the market risk premium. Therefore,
Market risk premium = market return – risk-free interest rate
Expected return on stock = risk-free interest rate + (beta * market risk premium)
r = rf + β (rm – rf )
From the data, we get average stock return 0.0129%. This value would be used to test whether the formula above accepted or not.
H0 = r = 0.0129%
Ha = r ≠ 0.0129%
For significant level = 5% (0.05)
Z0.05 = 1.96
H0 rejected if Z*> -1.96 or Z* < 1.96
Using LQ45-ANTM data
For β = 1.325274376, and rf ranged between 6.5% - 9.5% (changed from 2008-2010), expected return value is 0.010%.
Z* = (0.010% - 0.0129%) / 3.281% = -0.00086808
Since Z*< 1.96 and Z* > -1.96, H0 accepted
Using IHSG-ANTM data
For β = 1.562387986, and rf ranged between 6.5% - 9.5% (changed from 2008-2010), expected return value is 0.047%.
Z* = (0.047% - 0.0129%) / 3.278% = 0.010482
Since Z*< 1.96 and Z* > -1.96, H0 accepted
Because both of expected return from two kinds of β accepted, then this formula is valid, and accepted.
 
Conclusion
In creating decision about investment, we could use CAPM as tool, in calculating the market risk premium and expected return. Although some expert thinks that there are other factors that affect stock price. In a small company, CAPM calculation sometimes failed, because actual returns are much bigger than expected return. CAPM is too simple to handle everything that’s going on in the stock market.
In Aneka Tambang Tbk, beta value are bigger than 1. It means that this company stock return categorized as aggressive. When there is 1% increase in market return, then the expected increment for stock return are bigger than 1%.

Full paper

The Graph of Daily Stock and Market Return

Analysis

Daily stock and market return analysis

At October 8, 2008, because of the global recession, Indonesian stock market exchange fluctuates significantly in which result in decreasing value. The Aneka Tambang Tbk planned to buy back the stock from the market. They provide IDR 200 billion to do it. This issue results in decreasing of stock price, and the return rate.

At January 23, 2008, the highest return rate achieved because joint issue between Antam and Zhongjin for Herald Resources increase investor expectation to get higher return.

IHSG’s lowest price is at Rp. 850/share at 27th October 2008 this happens because of the sentiment of the downfall of Regional Stock Exchange yet in fact it is one of the effect of global recession with some domestic which is about Indover Bank. The players are still waiting for the tidings to turn in their favor that’s the reason why not too many transactions occurred that day.

IHSG’s highest price is at Rp. 4525/share at 4th January 2008 this is the top of the fluctuation that will mark the beginning of downfall of IHSG stock price since they keep on decreasing from day to day. Though, this price indicating the highest is no guarantee that the condition of the company is necessarily good.

LQ45’s lowest price is at Rp. 207/share at 28th October 2008 this is due to the global recession that happen throughout the country all over the world, Aneka Tambang Tbk is no exception for they was rammed by the tide of recession.

LQ45’s highest price is at Rp. 616/share at 9th January 2008. As the case in IHSG, the highest price was reached because of the positive response of the market at the beginning of downfall the price. But sooner they realize that the downfall will last longer than they have expected at the beginning. This is the early indication of massive effect of global recession that will be faced at the end of the year.







Calculating the average return will generate an expected return on the assets. As we can see from the table, the average from Aneka Tambang Tbk stock price is 0.01189% it mean that the investor expect to get 0.01189% return from their investment in buying the stock. For example, the investor purchased stock on May 12, 2008 at Rp 2449.34. With the expected return of 0.01189%, the price should be at least Rp 2449.81 before the investor can sell it.



Average market return of IHSG and LQ45

The table shows us the value of -0.03671% for IHSG market return and the market return for LQ45 is -0.00193%. This negative value was caused by global recession in 2008, where most of company stock prices collapsed. The average of daily market return for IHSG in 2008 is -0.44%. It means that in 2008, mostly the stock price decreased. And in 2009, the average of daily market return for IHSG is 0.18%.





Standard deviation rate

Standard deviation rate could be assumed as risk rate that an investor have by doing investment on the company. Bigger standard deviation value means bigger range of investment return rate, both positive and negative. For example, IHSG have average rate value -0.03671% and standard deviation rate 4.67034% means that the returns range mostly between -0.03671% ± 4.67034%. They could loss as big as – (0.03671% - 4.67034%) or gain at most (-0.03671% + 4.67034%) in general.

. The average return value of Aneka Tambang Tbk is 0.01189% and the standard deviation is 2.03697%. It means that the average value for return from stock in 2008 to January 2010 is 0.01189% and most of rate value distribution is 2.03697% higher or lower than the average. The positive value of average means that mostly, the investment give positive return compared to the previous day stock closing price.

Conclusion

From the data, we can conclude that this company has a good performance. While the compound index fall, this company could stand still. With the average rate of return 0.01189% is better than both compound indexes, IHSG and LQ45.

With lower risk rate (from standard deviation) compared to IHSG and LQ45, this company could be a good choice when an investor want to invest their money with low risk. But the effect of this low risk is the investor only get small rate of return compared to the other company with high standard deviation (we could see it from IHSG and LQ45 data).

Aneka Tambang Tbk

Aneka Tambang Tbk.
Company Profile
PT ANTAM Tbk. was incorporated in Jakarta on July 5, 1968, with an authorized capital of Rp 3,800 billion and issued capital of Rp 953.8 billion fully paid up. It is owned 65% by the Government of Indonesia (GOI) and 35% by the public. It is a leading Indonesian company in diversified mining and mineral processing industry.
ANTAM is a vertically integrated, export oriented, diversified mining and metals company. With headquarter in Jakarta and operations spread throughout the mineral-rich Indonesian archipelago, ANTAM undertakes all activities from exploration, excavation, processing through to marketing of nickel ore, ferronickel, gold, silver, bauxite and iron sands.
The company has long term loyal blue chip customers in Europe, Australia and Asia. Due to the vastness of the company's licensed exploration areas as well as known large holdings of high quality reserves and resources, ANTAM has formed several joint ventures with international partners to profitably develop geological ore bodies into profitable mines. The company was formed in 1968 from the merger of several single-commodity state-owned mining companies.
ANTAM was first listed on the Jakarta and Surabaya Stock Exchanges when the government sold 35% of the company to the public in 1997. In 1999, ANTAM listed its shares as a Foreign Exempt Listing on the Australian Stock Exchange, augmenting to a full ASX Listing in 2002. In 2003, ANTAM conducted its maiden US$ bond issuance through its Mauritian Subsidiary Antam Finance Ltd. The bonds are listed on the Singapore Stock Exchange. The company's shares are actively traded on the Jakarta Stock Exchange, with the 35% public ownership mostly comprised of over 200 foreign institutional investors, mainly from the UK and USA.
Resources and Reserves decreased
ANTAM's estimates of its total mineral resources and ore reserves decreased in 2005. This is due to extraction as well as more detailed drilling activities, which increased the accuracy of the estimates. Increasing the accuracy of the estimates can either increase or decrease the estimated volume of an ore deposit.
ANTAM's exploration division, conducted exploration activities focused on nickel, gold and bauxite in Indonesia. The main objectives of the exploration activities are the discovery of new prospects or new resources and to improve the accuracy of reserve estimation through detailed exploration.
Nickel
In 2005, ANTAM conducted nickel exploration activities at Halmahera, including Gee and Pakal Islands, Southeast Sulawesi and Obi Island. The exploration included geological, geophysical, drilling, and analytical and evaluation activities to improve the classification of known ore resources, with a view to supporting ANTAM's long term nickel developments, such as FeNi IV and the HPAL project. ANTAM will continue to focus activities at Halmahera and Sulawesi, to further delineate ANTAM's holdings of low-grade nickel ore (limonite), high-grade nickel ore (saprolite) and Low Grade Saprolite Ore (LGSO).

The Reason Why IFRS is Chosen as the Team's Name

Budi : Since Indonesia will implement this standard this year, it's better for us to know this term, because this term is related to our future job.

Muliawan : Because it sounds kind of cool. Especially because it still fresh in my mind after having the first Managerial Accounting Class this morning and the terms IFRS mentioned by the Lecturer=D then when the group needs a name, the first word pop-up in my mind is IFRS.
LoL.

S.Richard : I admit it sounds kind of cool, especially since at the time i didn't know the meaning of the word. so, when they suggested it i just go along with it. To my regret that the meaning of IFRS is quite hard to understand.. if i knew of this, i would have chosen names like Lord of the Ring or something.

The Team Profiles

here are three members of our team that consist of:

1. Budi Setiawan / IBMP / 17021
2. Muliawan / IBMP / 17103
3. S Richard / IBMP / 17403

Profiles:

#1

Name : Budi Setiawan

Address : Magelang St #93, Sleman
Hobbies : Playing computer

Education

Junior High School :

>SMP N 8 Yogyakarta

Senior High School :

>SMA N 3 Yogyakarta

University :

>Duta Wacana Christian University - Informatic Engineering

>Atma Jaya Yogyakarta University - International Business Management Program

Contacts:

e-mail

Yahoo : suen_liong@yahoo.co.uk

Gmail : suen.liong@gmail.com

MSN : suen_liong@windowslive.com

Live@edu : budi_setiawan@mhs.ukdw.ac.id

071217021@students.uajy.ac.id

Messenger

YM : bs_hsl@yahoo.com

Gtalk : suen.liong@gmail.com

MSN : suen_liong@windowslive.com

Live@edu : budi_setiawan@mhs.ukdw.ac.id

071217021@students.uajy.ac.id

Social Networking

Facebook : http://facebook.com/hsl88

Plurk : http://www.plurk.com/suen_liong

#2
Name : Muliawan
Address : Parangtritis St #23
Hobbies : Living the Life in a Meaningful Way
Motto : Time is Money
Fav. Food & Drinks : Chinese Food & Mineral Water
Fav. Subject : Finance

Contacts:

e-mail

Yahoo : molz88@yahoo.com

MSN : chingyen@live.com

Live@edu : 081217103@students.uajy.ac.id

Messenger

YM : molz88

Social Networking

Facebook : http://www.facebook.com/profile.php?ref=profile&id=1191876609

#3

: Richard

Address : P. Puger 5 #1
Hobbies : Playing Games
Motto : It's not the great who are strong, it's the strong who are great
Fav. Food & Drinks : Pizza & Coca - Cola
Fav. Subject : Human Resource

Messenger

071217403@students.uajy.ac.id

The Definition of IFRS

International Financial Reporting Standards (IFRS) is the term used in determining the standards, the framework, and the interpretation of the financial data into an appropriate report. IFRS used to be called International Accounting Standards (IAS) which was issued in the year of 1973 until 2001. The name was then changed into IFRS by the International Accounting Standards Board (IASB) after resuming the responsibility of the previous IASC (International Accounting Standards Comitee). Until now the IASB still thrive to add new standards to the IFRS.