Fundamental Analysis of PT Tri Banyan Tirta Tbk (ALTO)
Fundamental analysis is a crucial method for investors to assess a company's intrinsic value by examining its financial statements, business operations, and economic environment. This article provides a fundamental analysis of PT Tri Banyan Tirta Tbk (ALTO), an Indonesian company in the bottled water industry.
This analysis shows that the company has been facing significant financial challenges, making it a high-risk investment. The company has a history of unprofitability, financial distress, and operational issues.
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| Fundamental Analysis of PT Tri Banyan Tirta Tbk (ALTO) |
1. Company and Industry Profile
PT Tri Banyan Tirta Tbk (ALTO) is a producer of bottled mineral water in Indonesia, established in 1997. The company's main products include "ALTO Natural Spring Water" and "Total 8+ ionized alkaline water." They also serve as an OEM (Original Equipment Manufacturer) for other brands, such as "VIT" from Danone-Aqua. The company's business is highly dependent on consumer spending and the competitive landscape of the packaged drinking water market in Indonesia.
The bottled water industry is competitive and sensitive to economic conditions. Factors such as raw material costs (e.g., plastic packaging), energy prices, and competition from both local and international brands heavily influence the company's profitability.
2. Financial Statement Analysis
A review of ALTO's recent financial statements reveals a company in financial distress. This analysis is based on recent available annual reports and financial statements.
a. Income Statement: A History of Losses
The most critical finding from ALTO's income statement is its consistent net losses over several consecutive years.
Revenue: While there have been fluctuations, the company has struggled to achieve sustainable revenue growth. For example, revenue fell significantly from 2022 to 2023. This indicates a weak market position or an inability to compete effectively.
Net Profit: The company has failed to generate a net profit for an extended period, reporting a net loss of Rp 25.8 billion in 2023, a significant increase from the Rp 16.1 billion loss in 2022. This trend shows that ALTO's core business is not generating enough income to cover its expenses.
Profitability Margins: Both gross and net profit margins have been consistently negative, highlighting a fundamental flaw in the company's cost structure and pricing strategy. The company's production costs often exceed its revenue, making it unsustainable.
b. Balance Sheet: Signs of Financial Distress
ALTO's balance sheet provides further evidence of financial instability.
Negative Equity: The company's equity is negative, meaning its total liabilities exceed its total assets. This is a severe red flag indicating that the company is technically insolvent.
High Debt Burden: The company's debt-to-equity ratio is extremely high due to its negative equity, placing a significant financial burden on the company. A high level of debt increases the risk of bankruptcy, especially when a company is not generating a profit.
Liquidity: The current ratio (current assets divided by current liabilities) has been very low, indicating that the company may not have enough liquid assets to cover its short-term debt obligations.
c. Cash Flow Statement: Funding Challenges
The cash flow statement shows that ALTO's operations are not generating a positive cash flow.
Cash Flow from Operations (CFO): The company's negative cash flow from operations means it is not generating enough cash from its core business to sustain itself.
Dependence on Financing: To stay afloat, ALTO has relied on cash from financing activities, such as taking on new loans or receiving funds from related parties. This is not a sustainable long-term strategy and adds to the company's financial risk.
3. Key Financial Ratios and Valuation
Given ALTO's financial situation, many standard valuation ratios are either negative or not applicable.
P/E Ratio: The Price-to-Earnings (P/E) ratio is negative because the company has not generated positive earnings. This makes the P/E ratio useless for valuation and is a direct result of its financial struggles.
P/B Ratio: The Price-to-Book (P/B) ratio is very low (e.g., around 0.12). While a low P/B ratio can sometimes indicate an undervalued stock, in ALTO's case, it reflects the market's assessment of the company's dire financial health and negative equity. The market perceives the company's book value as being worth significantly less than its accounting value.
ROE and ROA: The Return on Equity (ROE) and Return on Assets (ROA) are both negative, showing that the company is not only failing to generate a return for its shareholders but is actively destroying value.
4. Management and Future Outlook
Management has been transparent about the company's struggles in its public filings. They have cited weak market demand and the termination of a key contract as major reasons for their financial performance. They have also indicated that the company is trying to manage its financial obligations and improve operational efficiency. However, the company's persistent losses and heavy debt burden present a significant challenge.
The fundamental analysis of PT Tri Banyan Tirta Tbk reveals a company in severe financial distress. An investor considering this stock would be engaging in a highly speculative investment. The company's history of losses, negative equity, and liquidity issues make it a very high-risk proposition. The low stock price reflects the market's justified pessimism about the company's future. A prudent investor would be very cautious and consider the possibility of further losses or even bankruptcy.
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