Analysis of Company Stock and Business Portfolio

Company Profile

Established in 1951, PT Gajah Tunggal Tbk began its tire manufacturing by producing bicycle tires. Thereafter, the Company has grown to become the largest integrated tire producer in South-East Asia. The Company currently operates 5 modernized tires and inner tubes manufacturing plants for many types and sizes of radial, bias and motorcycle tires, and 2 tire related production facilities which manufacture tire cord and SBR (Styrene Butadiene Rubber).

Mission
To be a leading and dependable producer of an optimal range of competitively priced, superior quality tires while also pursuing brand equity and corporate social responsibilities as well as delivering profitability and returns to shareholders and values to stakeholders.

The Products

1. Tires (Main Products)

· Radial Tires

Its radial tires product mix consists of a wide range of different tires, primarily for passenger cars and light trucks. High performance and Ultra high performance radial tires increasingly make up a more important part of our radial sales. It has a good control, it has a long life, and it also has good shock damper.

· Bias Tires

Its bias tire product range includes passenger cars, light trucks, trucks and buses, off-road tires, industrial tires and agricultural tires. It is strong, it is flat tire resistant, and fit to the bad road condition.

· Motorcycle Tires

It is used for motorcycle and scooter tires. With the bias tires technology, it is strong, flat tire resistant; it also fit for the bad road condition.

2. Non-Tires

· Tire Cord

The Company's tire cords are already used as raw materials by tire manufacturers in Indonesia and other big tire manufacturers abroad. It included tire cord polyester and nylon. It is to supply the tire division and sold to the external parties. The sales are about 7% of the total company’s sales.

· Synthetic Butadiene Rubber

We can call it as just synthetic rubber. This product is to supply the tire division, and also sold to the external parties. The sales for external parties are about 7% of the total company’s sales.

· Analysis of Company Stock Risk and Market Risk

Standard deviation is a statistical measurement that sheds light on historical volatility. A large dispersion tells us how much the return on the fund is deviating from the expected normal returns.

Higher the return, is higher the average return. And it means that the stock is more volatile.

• Beta calculation

Beta is calculated using regression analysis, and you can think of beta as the tendency of a security's returns to respond to swings in the market. A beta of 1 indicates that the security's price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market. For this case, the beta between stock return of Gajah Tunggal and market return in IHSG is 0.32437199 . It is <> that the stock of Gajah Tunggal will be less volatile than the market.

Factors influence the fluctuation of stock return and market return

Factors influencing stock return:

· Earning per Share (EPS)

· Interest rate

· The amount of dividend

· Company’s profit

· Risk and return

· Debt

Factors influencing market return:

- Stock Price

- BI rate

- Inflation

- Stock return of a company

Analysis of Company Business Portfolio Using BCG Matrix

Now, I will put each product in BCG Matrix.

Conclusion

· Standard deviation is a statistical measurement that sheds light on historical volatility. A large dispersion tells us how much the return on the fund is deviating from the expected normal returns.

Higher the return, is higher the average return. And it means that the stock is more volatile.

· The factors influencing the fluctuation of stock return are earning per Share (EPS), Interest rate, the amount of dividend, company’s profit, risk and return, debt. And the factors influencing the fluctuation of market return are Stock Price, BI rate, inflation, and stock return of a company.

· From the analysis using BCG Matrix, we can easily know in what position the product is. Radial tires are in question mark, the SBR and motorcycle is in the star, the tire cord and bias tires is in the cash cows. And after we know the position, we also know what action the company should do in order to gain a profit or to avoid the bankruptcy.