I. COMPANY PROFILE (NEW!!)

PT BISI International Tbk is Indonesia’s largest producer of hybrid seeds for corn, rice, and fruits and vegetables, a major Indonesian producer of pesticides and a distributor of fertilizer, which established in 1983. The Company’s head office is located in Sidoarjo, East Java, with its plant located at Desa Sumber Agung, Kediri, East Java. The Company was founded by the Charoen Pokphand Group, and has an operating track record of 24 years. BISI maintains a nationwide operational footprint for research and development, production, marketing, distribution and sales.

BISI has three subsidiaries; (1) PT Tanindo Intertraco which distributes and markets hybrid corn, rice and vegetable seeds and agri-related products, (2) PT Multi Sarana Indotani which manufactures pesticides, and (3) PT Tanindo Subur Prima which distributes and markets only vegetable seed imported from Chia Thai Seed Co Ltd.

On May 11, 2007, the company had been obtained the Effective Statement Letter from the Chairman of the Capital Market Supervisory Agency and Financial Institutions to conduct an initial public offering/IPO 900 million shares with a share to the public through the Indonesian Stock Exchange (BEI) at the offering price of Rp200 (full amount) per share. The Company's shares issued and fully paid 3 trillion shares have been listed on the BEI. Nowadays, Indonesia is no longer self-sufficient in food sector. So, Indonesia still import rice or corn from abroad. Therefore, public expected agriculture company to enter the capital market. The purpose is to make agriculture company active in the trading of stock.

This graphic shows the growth of stock in Bisi International from the first time they joined Capital Market on May 11, 2007 until now. We can see that, the graphic was increased and decreased constantly. Although, the stock price decreased after middle of 2008, it not decreased sharply but step by step so it reduced the risk of investment.

II. ANALYSIS

Return is the rate of profit from the investments that consist of capital gains or losses and dividend yield. Yield is a component of return that reflects the components of cash flow or income earned from the investments periodically. If we invest in stocks, dividend yield is indicates by the amount we earn. Meanwhile, the capital gain (loss) as the second component of the return of an increase (decrease) in prices of securities (stocks or bonds), which can provide gain (loss) for investors. Return is one of the factors that motivate investors to invest and also a reward for the courage of investors to bear the investment risk.

Analysis of Daily Market and Stock Return

In this calculation, market and stock return that we used is capital gain (loss). Capital gain or loss is differentiation of gain or losses that faced by investor because now the price of stock that relatively higher or lower than the price of stock before. For example in Jan 20, 2010, closing price is Rp 1,490 than the next day the value of that investment had appreciated to Rp 1,570 that means investor get capital gain of Rp 1,570 - Rp1,490 = Rp 80 per share. In other world, if the investor invested their money in Jan 20, 2010 then the next day they will get profit of 0.0537 or 5.37% from the money that they invest (if they sell). But sometimes investor also can meet losses when they invest their money in Bisi international. For example in July 17, 2008, closing price Rp 4,725 and the next day being Rp 4,000. It means investor get losses Rp 4,725 - Rp 4,000 = (Rp 725) per share. In other word, if the investor invested their money in July 17, 2008 then the next day they will get losses for 0.1534 or 15.34% from the money that they invest (if they sell). Because of that, the investor must see the market return to know about the history of gain or loss when they buy the stock. Then they can make prediction about their expected return. In general rate, the nominal return measures how much more money you will have at the end of the year if you invest. Market and stock return that shows positive number will giving gain and the negative number will produce losses for investors. From the both, LQ45 is therefore a more comprehensive index than the IHSG.

From the movement of closing price of BISI, we can see that BISI is stable company that has a stable range of return. The return never changed too sharply. This is also proved that the risk of investment in BISI is small because the return didn’t change too high or low.
Now, looking from the impact of capital market, we can see significant return from LQ45 in February 1, 2010 that the return until -0.999 (the number almost -1). The graphic of the return of LQ45 is down significantly. The same condition also happened in IHSG, the market return of IHSG also in minus number (suffered losses). But, it is not give the big impact to the stock return of BISI because BISI still can give the gain for 0.051948 or 5.195% from the total investment.

Then in 2008, Augusts 13, we can see that the return of investment in the capital market show the indexes both LQ45and IHSG gave the capital gain only in small value. IHSG give positive return only for 0.00289 (2.89% from total investment in BISI’s stock) and LQ45 for 0.00437. But that small number of return not happened in BISI because they can give the capital gain for investor until 0.20174 or 20.174% from the total investment in BISI stock. This number of return is the highest rate of return from 2008 until March 2010.

This proved that the condition of stock in BISI not too much affect by macroeconomics condition that represent by the market index both of LQ45 and IHSG. In other word, the return of BISI stock not sensitive with condition of economic in Indonesia. The condition of stock isn’t suffered by fluctuation like the economic condition.

Analysis of Beta (ß)

Beta is also called the market beta. With the assumption that the relationship between securities return and market return is linear using regression techniques. With the requirement, return from stock or security as the dependent variable and the market return as independent variables. From the regression equation, we will find the coefficient of beta that is assumed stable over the period of observation.
We can get the regression analysis from the daily market return and daily stock return. Daily market return consists of IHSG and LQ45 for period January 2, 2008 until March 31, 2010. We use regression analysis to find the beta to know the sensitivity of a stock’s return on the market portfolio. So we can know how the condition of capital market influences the stock of the company. In this case, risk depends on exposure to macroeconomic events and can be measure as the sensitivity of a stock’s return to fluctuations in returns on the market portfolio.

In the regression analysis, we use stock return as dependent variable and market return as an independent variable because we want to know how the capital market that represent the macroeconomics condition influences the movement stock of BISI international. In the first regression analysis, we used daily market return of IHSG as independent variable and stock return as a dependent variable. The result of the beta is 0.968 (less than 1). The slope is 0.968. This means that for each increase of 1 in X, the mean value of Y is estimated to increase by 0.968. In other word, for each increase of 1% of return in the market, the mean values of risk are estimated to increase by 0.968%. Thus, the slope represents the portion of the daily stock return that is estimated to vary to the market return. The Y intercepts is 5.00765E-05 = 0. The Y intercept represents the mean value of Y when X equals 0. Because the percent of the market return can be 0, this Y intercept has practical interpretation.

Then for the result of regression analysis between LQ45 and BISI international based on market and stock return. The slope is 0.146. This means that for each increase of 1 in X, the mean value of Y is estimated to increase by 0.1461. In other word, for each increase of 1% of return in the market, the mean values of risk are estimated to increase by 0.146%. Thus, the slope represents the portion of the daily stock return that is estimated to vary to the market return. The Y intercepts is 0.000521 = 0. The Y intercept represents the mean value of Y when X equals 0. Because the percent of the market return can be 0, this Y intercept has practical interpretation.

We know that Beta that based on LQ45 is smaller than IHSG. LQ45 is 0.146 and beta for IHSG is 0.968. So the sensitivity of BISI in IHSG is bigger than LQ45. The condition of market in IHSG is more representative to the condition of stock in BISI than LQ45. It happened because LQ45 just consist of 45 companies that active in trade and it different with IHSG that consists of many company both active or not.
The both result of beta proved that BISI is a defensive stock (the result of beta smaller than 1). Why? Betas greater than 1 meaning that their return tend to respond more than one-for-one to changes in the return of the overall market (condition of aggressive market). The betas of defensive stock are less than 1, the returns of these stocks vary less than one-for-one with market returns. Defensive stock is a stock that tends to remain stable under difficult economic conditions. The stock BISI International is defensive stocks because that company operating in food industry. These stocks hold up in hard times because demand does not decrease as dramatically as it may in other sectors. Defensive stocks tend to lag behind the rest of the market during economic expansion because demand does not increase as dramatically in an upswing.

Looking from the type of stock, Investor that likes to use defensive investment strategy can include BISI in their portfolio. Portfolio management strategy aims at investing in low-risk products. Stock of BISI is defensive stocks because undervalued (the value of return in stock less than market), less volatile, steadily growing, and offering reasonable dividends. The main advantage of a good defensive investment strategy is the minimized risk of losing the capital. Other advantages include better planning of investments, almost steady and predictable income, and better use of risk-minimizing practices like close stop-losses. Beginner investors can invest their fund in BISI because BISI have less risk-tolerance and investors having less time to monitor their portfolio.

III. CONCLUSION

BISI International Tbk. is good and stable company because if the investor wants to choose the low risk investment, BISI international is the correct alternative. The graph showed that BISI has relative stable return of daily stock. The return never changed in the long range of return. It is that became judgment from investor to choose BISI as a low risk investment. The investors that want to play safe in the stock market will very suitable to make portfolio in BISI.

Then looking from the result of the beta, this company is very little affected with the market capital and macroeconomics condition. So if the fluctuation happens in macroeconomic condition, the affect for this company will very little. It’s the important thing that supported BISI as a safe and stable company This stock is specially for investor who don’t want take a risk when buy some stock. The main advantage that can investor get from BISI’s stock is the minimized risk of losing the capital. Beginner investors can invest their fund in BISI because BISI have less risk-tolerance and investors having less time to monitor their portfolio.

WE GOT IT!!!!

Finally!!! We already DONE the SECOND ASSIGNMENT-and also our last assignment for this course!!! YAAAYY!!! Thank's God^O^

But we don't know have to say sad or happy.. this course is a bit difficult, but fun^^.. just like a pre-working in a company.. Thank's to Mr.Alex for your direction in this semester.. hehee..

Okay guys, check our Complete Report on the next post^^
and we hope we will success for the Presentation tomorrow MUAHAHAHA!!!
We will give our best and bring our company name *BISI INTERNATIONAL TBK* to the stage that have been waiting for us!!! (lebay)

,love
Gruppo Dirischio

I. Company Profile of BISI INTERNATIONAL

Bisi International is Indonesia’s Leading Hybrid Seed Producer. Established in 1983, PT BISI International Tbk is Indonesia’s largest producer of hybrid seeds for corn, rice, and fruits and vegetables, a major Indonesian producer of pesticides and a distributor of fertilizer. The Company’s head office is located in Sidoarjo, East Java, with its plant located at Desa Sumber Agung, Kediri, East Java. The Company was founded by the Charoen Pokphand Group, and has an operating track record of 24 years.

Today, BISI maintains a nationwide operational footprint for research and development, production, marketing, distribution and sales. BISI has three subsidiaries;

(1) PT Tanindo Intertraco which distributes and markets hybrid corn, rice and vegetable seeds and agri-related products,

(2) PT Multi Sarana Indotani which manufactures pesticides, and

(3) PT Tanindo Subur Prima which distributes and markets only vegetable seed imported from China Thai Seed Co Ltd.





Vision: Feed A Growing World.

Mission: As global demand for food, feed, fuel and fiber increases, we deliver innovative products, technology and support to help farmers increase productivity Vision of International, Tbk: Feed A Growing World.





Do you want to know more about Bisi International, Tbk.??
click HERE to visit their website^^

II. ANALYSIS

Stock price index is an indicator that shows the movement of stock prices. Index has function as an indicator of market trends, which means the movement of the index describes market conditions at any time, whether the market is active or weak.

Index will help us to know the trend of stock price movement today; whether it is rising, steady or falling. The movement of the index becomes an important indicator for investors to determine whether they will sell, hold or buy one or several shares because stock prices have quickly movement.

In Indonesia Stock Exchange, there are 6 (six) types of indexes, but we will concern only in two types following:

a. Composite Stock Price Index or Indeks Harga Saham Gabungan (IHSG), using all of the shares that listed as a component of the index calculation.

b. LQ45 Index, index which consists of 45 active stocks with reference to trading liquidity variables and market capitalization. Every 6 months there are new stocks coming into the LQ45.

Daily Market and Stock Return

Before that we will explain about rate of return from Bisi International. The function of risk of return is to know the gain or losses when the investor buys the stock. Because of that, investor should see the market return to know about gain or loss when they buy the stock. In general rate, the nominal return measures how much more money you will have at the end of the year if you invest.

The conclusion, market return that shows positive number will giving gain and the negative number will produce losses for investors. From the both, LQ45 is therefore a more comprehensive index than the IHSG. Also, it measures the performance of a portfolio that holds shares in each firm in proportion to the number of shares that have been issued to investors.

Average of Daily Stock and Market Return

From average of daily stock returns and daily market returns for 2 years, we can know about the company’s the benefit or losses for the investor when the investor invest their money in the company.

The Bisi International average of daily stock return in 2 years is 0.00036063, so the company gives only small gain for the investor who invests in this company, although it is only small gain. It can be based for investors to invest in the next future. So investors can be choose Bisi International as a save stock option.

Graphic of Daily Stock and Market Return

(click the picture to enlarge)

· According to data from IHSG and LQ45, we can see that the lowest Daily Market Return in October 8, 2008, it might be happen because of several things. Indonesia Stock Exchange Authority (IDX) has decided to close the stock trading on the sessions I started at 11:08 am, because of the destruction Index Composite Stock Price (JCI), which plummeted by 10.38%. Only 6 stock price rises, the remaining 171 stocks fell and 9 shares stagnant. And we think that Bisi International is the one of 171 stocks that was fall.

· So, that’s why Bisi International also got a very significant numbers until -0.24369748, when the IHSG got 0.10375250 and LQ45 got -0.1186399 on their Daily Market Shares. From the graphic, we can see that Bisi International (it show in blue line)has very active in trading because compare to IHSG and lq45, the line show it move rise and fall too narrow.

· The reason why that IHSG daily market share on January 23, 2008 get the highest number because, after devastated to 2200 levels, eventually the stock price composite index (JCI) successfully rebound. Strength sentiment from The Fed could raise the global market. JCI on trading Wednesday (23/1/2008) closed rise 7.92 percent, or 181.754 to positions 2476.278.

· For the LQ45, we can see that it was increase in the highest point in 30 June 2008. From the report we can know that it increased because of a mining sector. Between the other, LQ45 also has the highest number of Daily Market Return at 0.1053279 compared to the Bisi International and IHSG Stocks when it was 0.00728525 and 0.01923077 in 30 June 2008.

Deviation Standard of Daily Stock and Market Returns

To make investment, investors must pay attention with the risk of market stock. To measure the risk and volatility, investor need to know amount of variance and standard deviation between stock and market index. Because standard deviation is simply square root of variance, it too is a natural to measure risk.

According to historical stock of Bisi International, the standard deviation is 0.045533613 it means Bisi international has low risk. So investor can invest their money in this company because the risk is low. It can be happened because the movement of stock price in Bisi is not too narrow. But it gave impact for gain and losses of this company. The gain and losses that received by investors is relatively small.

Of course, there is no reason to believe that the market’s variability should stay the same over many day, we can see that from the graphic. But, risk still can be measure by the fluctuations of overall stock market. We do not look at the stock in isolation because the risks that loom when you’re up close to a single company are often diversification.

Noted that market risks are macro risk, investors holding diversified portfolios are mostly concerned with macroeconomics risk. They do not worry about microeconomics risks peculiar to a particular company of investment project.