Investors’ Delight? Climate Risk in Stock Valuation during COVID-19 and Beyond

We use the COVID-19 pandemic period in 2020 as an exogenous shock event to assess in how far climate risks measured by carbon exposure have entered and established themselves in the valuation of global stocks. In addition to descriptive analyses, we conduct cross-sectional panel regressions to assess the influence of carbon intensity levels on return and risk characteristics during and after the shock period. Furthermore, a difference-in-differences model setup allows us to infer whether these influences were significantly different when comparing pre-shock, shock, and post-shock periods. We find that carbon intensity affected returns significantly and negatively during a time of high uncertainty. In fact, high-emitting stocks suffered significantly more compared to the pre-crisis period. However, they could make up for their additional losses in the recovery period. In line with their high-risk exposure towards stranded assets and climate policy uncertainty, carbon-intensive stocks face higher risk levels in more stable economic times, thus justifying a carbon premium.

An Empirical Study of Equity Incentive on the Stock Valuation of Tobacco Companies

Objectives: Since the China Securities Regulatory Commission (CSRC) issued the Measures for the Administration of Equity Incentives of Listed Companies, the equity incentives of A-share listed companies have become normalized, the discussion of the effect of the implementation of equity incentives on stock valuation can provide a reference for investors whether to choose listed companies with equity incentives for stock valuation. This paper uses python tool to select 30 A-share listed companies that formally started to implement equity incentives in 2018 and the proportion of equity incentives is between 4% and 6% as the sample, and uses cross-sectional data model for empirical analysis. The empirical results show that: first, the implementation of equity incentive in Chinese listed companies has a positive impact on stock valuation, and the impact of equity incentive on stock valuation is significantly better than that before implementation, and the incentive stocks have more investment value; Second, the conclusion is also suitable for Chinese tobacco related companies, which has important reference value for tobacco preference investors.

Stock Valuation of Indonesia Pharmaceutical Company with COVID-19 Vaccination Development Prospects Amidst Pandemic Situation (Case Study of PT. Kalbe Farma, Tbk.)

As one of the world’s most populous countries with a fast-growing economy, Indonesia's market for pharmaceuticals has become very promising. COVID-19 pandemic that outbroken since early 2020 has brought a huge impact on the overall country condition while at the same time stimulate the growth of the pharmaceutical market as it is forecasted to grow at a CAGR of 6.3% between 2016 and 2021 according to IQVIA. This situation creates a reaction in the stock market especially of pharmaceutical companies that experienced an average increase of 67% since last year with its key driver of news regarding the distribution of Sinovac vaccine by some state-owned pharma companies as part of the national vaccination program. PT. Kalbe Farma, Tbk as one of the largest pharma companies in Indonesia is also accounting a positive growth over the years while also presented with bright prospects as a result of its strategic initiatives to collaborate with South Korea in developing COVID-19 vaccine and medication, named Genexine which is planned to be completed in Q3 2021. The possibility of success in this project might affect the company’s stock performance since it would result in bigger profitability for the company. In order to help investors to make a decision in this situation, the intrinsic value of the company stock is required. Therefore, conducting absolute and relative valuation are believed to be important in order to find the intrinsic value. This study examined absolute valuation using FCFF model and relative valuation using P/E and EV/EBITDA for KLBF. Result of the valuation suggested that the current stock price of IDR 1,445 is overvalued. The intrinsic value calculated from FCFF model is IDR 1,397 and based on the relative valuation models are IDR 1,330 and IDR 1,233 for EV/EBITDA and P/E ratio, respectively.

The Quantitative Easing Bursts Bitcoin Price

In this paper we analyze the existence of cointegrating relationships between Bitcoin, S&P 500, and the quantity of money M2. We perform our analysis with and without applying time warping pre-processing. In all cases we find strong evidence that, in the period 2016-2021 the three time series show two cointegrating relationships and therefore share a common stochastic trend. In addition, a low correlation between Bitcoin and S&P 500 is detected. These finding justify the increased interest of investors in Bitcoin as an alternative asset class. The economic interpretation is that the stock valuation is primarily determined by financial phenomena, in particular the availability of large quantity of money. Money supporting investment is due both to the actions of Quantitative Easing and to the exchange of creditor/debtor role that took place between households and firms. The price of both Bitcoin and stocks is increasingly influenced by the amount of money in circulation and follows the same stochastic trend.

Stock Valuation in Pharmaceutical Sub-Sector Companies using the Discounted Cash Flow and Relative Valuation Methods in the 2013-2020 Period

This research aims at calculating the fair value of shares of pharmaceutical companies listed on the Indonesia Stock Exchange (IDX). The data used in this research is historical data from the 2013-2020 financial statements, which are used as the basis for projections in 2021-2025. The method used in this research is Discounted Cash Flow (DCF) method with Free Cash Flow to the Firm (FCFF) approach and Relative Valuation method with Price to Earning Ratio (PER) and Price to Book Value (PBV) approaches in three scenarios. The three scenarios used are the optimistic scenario (condition above industry growth), the moderate scenario (the most likely condition for the company), and the pessimistic scenario (the average condition of the industry). The results of the research showed that by using the DCF-FCFF method, KAEF and PYFA stocks experienced overvalued conditions in all scenarios. Meanwhile, KLBF and DVLA stocks were undervalued in all scenarios. Then, from the calculation of the Relative Valuation method, each company was still within the industry range in all scenarios. Overall, KAEF stocks were overvalued by 57.817%, KLBF stocks were undervalued by 7.879%, DVLA stocks were undervalued by 370.865%, and PYFA stocks were overvalued by 16.662% both in DCF method and in Relative Valuation method.