To arrive at the targeted fair value of shares, PEFINDO use three approaches, which are:
- Income Approach, with Discounted Cash Flows Methodology. This approach is used when the subject company has an operating focus rather than an asset-holding focus.
- Market approach, with Guideline Company Methodology. The market approach is used based on the principle of what is the price of similar assets in the market. The market price of the stocks of publicly traded companies engaged in the same or a similar line of business as targeted company, whose shares are actively traded in a free and open market, can be a valid indicator of value when the transactions in which stocks are traded are sufficiently similar to permit meaningful comparison.
- Asset based approach, with Adjusted Net Asset Value Methodology. This approach is used should preferably to be used in businesses having mature growth cycle and is more suitable for capital intensive industry.