Chapter 7

Discount Arithmetic

This report has quoted Saratoga's discount to net asset value throughout. This chapter builds it from the price up. At Rp1,760 the whole company costs less than the two largest quoted stakes it owns. Zeroing the unpriced book, charging every deferred tax and capitalising the holding-company cost forever still leaves Rp1,539 per share of gap that no disclosed item accounts for.

Sources: Net Asset Valuation as of 31 December 2025 and 2024 [1]; IDX close of 27 July 2026 [2]; 31 March 2026 interim statement of financial position [3]; dividend from the 12 June 2026 payment [4].

What Rp1,760 buys

Saratoga's own net asset table gives an effective ownership percentage, a closing share price and a valuation for seven listed holdings, and shows the rest of the book as four unpriced lines [5]. Divided across the 13,564,835,000 shares in issue [6], the seven priced stakes come to Rp3,658 per share, the four unpriced lines to Rp822, and net debt subtracts Rp36 — Rp4,444 in total.

Source: derived from the Net Asset Valuation table at 31 December 2025 [7] and the 13,564,835,000 shares in issue [8].

Tower Bersama alone covers 78% of the share price. Adding Merdeka Copper Gold covers it 1.23 times. Both are IDX-listed, both are marked in the table at their own closing screen prices — Rp2,680 and Rp2,280 at 31 December 2025 [9]. On that arithmetic a buyer at Rp1,760 pays for those two positions at a 19% discount and receives the coal complex, the controlled distribution business, the industrial gas and construction stakes, the entire unlisted book and the net cash position at no cost. The same sentence stated the other way: the seven priced stakes net of debt are worth Rp3,622 per share, and the market pays 48.6 cents per rupiah of them.

That is a statement about price, not about quality. The marks themselves are only as good as the screen prices behind them, and those prices move — the coal pair fell Rp4,160 billion during 2025 while Tower Bersama and Merdeka rose Rp5,865 billion [10].

The gap, decomposed

Three of the four candidate explanations for the gap can be sized from the filings. The fourth is what is left.

Sources: unpriced lines and NAV per share from the Net Asset Valuation table [11]; deferred tax liability from the consolidated statement of financial position [12]; operating expenses from the consolidated statement of profit or loss [13]; residual derived.

The unpriced book. The four lines carrying no share price total Rp11,148 billion, 18.3% of the portfolio, or Rp822 per share [14]. That is the widest available definition of estimation risk; the auditor's narrower one, which strips out the holding vehicles that themselves own quoted shares, puts it at Rp9,058 billion or Rp668 per share (Marks Without Prices). Writing all of it off — which no evidence supports, and which the accounts contradict for the years when Level 3 rose while quoted marks fell — removes at most Rp822 of a Rp2,684 gap.

Deferred tax. The balance sheet carries a net deferred tax liability of Rp2,053,719 million, of which Rp2,024,316 million sits against investments in shares and other securities at the Company level [15] [16]. At the 22% enacted rate that implies a taxable temporary difference of about Rp9,201 billion [17] — far less than the unrealised gain embedded in a Rp60,768 billion portfolio, because Rp3,062,200 million of the Company's 2025 income was deducted in the tax reconciliation as subject to final tax [18]. The accounts do not say which holdings sit inside the final-tax perimeter, so the split cannot be attributed position by position. The deduction is Rp151 per share, 5.6% of the gap. Cash tax actually paid in 2025 was Rp25,883 million [19].

The manager's cost. Operating expenses were Rp232,558 million in 2025 against Rp232,424 million in 2024 [20], 0.39% of net asset value against a 0.43% ratio the year before, and 13% below the Rp267 billion target the Company set for itself [21]. Capitalised in perpetuity at 10% that is Rp2,326 billion, or Rp171 per share. At 7.88% — the top of the rupiah range Saratoga itself pays on secured bank borrowings [22] — it is Rp218 per share. Either figure is a rounding item against the gap, which is the same conclusion the pay chapter reached from the cost side (Pay and Alignment).

The residual. Rp4,444 less Rp822 less Rp151 less Rp171 is Rp3,299. The price is Rp1,760. The difference — Rp1,539 per share, Rp20,881 billion, 35% of published net asset value — is applied to a book of listed stakes marked at their own screen prices, after every named haircut has already been taken.

A fresher balance sheet does not narrow it

The published net asset value is seven months old. The 31 March 2026 interim balance sheet allows the same calculation on more recent marks: investments in shares of Rp63,326,007 million, other securities of Rp4,143,299 million, investment property of Rp109,642 million, cash and time deposits of Rp1,026,895 million and borrowings of Rp795,960 million [23]. That construction reproduces the published Rp4,444 exactly when run on the 31 December 2025 balance sheet [24] [25], which is the check that makes it usable.

On 31 March 2026 it gives Rp67,810 billion, or Rp4,999 per share. The Rp1,401 billion dividend paid on 12 June 2026 [26] takes it to about Rp4,896. Against the Rp1,760 close [27] that is a 64.0% discount, not 60.4%. The March quarter also moved the composition: Level 1 investments in shares rose from Rp26,112,930 million to Rp31,490,714 million while Level 3 was almost unchanged at Rp5,245,466 million [28], so the increase came from quoted prices rather than model marks. Two caveats bound this: the figure is a reconstruction from an interim balance sheet rather than a published net asset value, and four months of portfolio price movement since 31 March are not in it.

What the price pays for the cash

The gap can also be read as a yield, using only cash that actually moved. The 2025 cash flow statement records Rp2,510,415 million of dividends received and Rp161,371 million of interest and other receipts against Rp176,921 million of interest paid, Rp118,362 million to employees, Rp25,883 million of income tax and Rp56,137 million of other operating payments [29]. That nets to Rp2,294 billion, Rp169 per share. On the same 2024 lines it was Rp3,959 billion, Rp292 per share [30].

Sources: derived from the 2025 consolidated statement of cash flows [31], the Rp103.3 dividend paid 12 June 2026 [32] and the Rp1,760 close [33].

At Rp1,760 the shares cost 10.4 times the 2025 recurring cash take and 6.0 times the 2024 one, before any value is placed on the portfolio itself. Saratoga borrows secured rupiah at 5.45% to 7.88% [34], so the equity yields more on cash receipts alone than the company pays its banks — with the difference that the bank has a pledge over TBIG, MPMX, MDKA and ADRO shares and a minimum market-value-to-debt covenant [35], and the shareholder has neither. The swing from 16.6% to 9.6% in one year is the honest limit on this framing: the cash stream is a coal dividend stream, and it halved.

The record the discount has set

Sources: net asset value per share and year-end closing prices from each year's annual report — FY2021 [36] [37]; FY2022 [38] [39]; FY2023 [40] [41]; FY2024 [42] [43]; and FY2025 [44] [45].

The five year-end readings average 48.5%. The trend inside them matters more than the average: 32.6% at the end of 2021, when net asset value per share had just risen 78% on the coal cycle [46], widening in three of the four years since, and reaching 64.4% at the end of 2025 — the widest of the series — in a year when net asset value per share rose 12% [47]. The share price has fallen in three of the last five calendar years while the asset value behind it has risen in four of them. A discount that widens as the underlying compounds is not a temporary dislocation; it is the market repricing what a rupiah of Saratoga's net asset value is worth in Saratoga's hands.

What has to move

The price is the product of two numbers, and the arithmetic is symmetrical.

Source: derived from the Net Asset Valuation table [48], the 31 March 2026 balance sheet [49] and the 2021 to 2025 discount range; implied prices in Rp per share.

The coal complex — Alamtri plus Adaro Andalan — is Rp17,015 billion, 28.0% of the portfolio and Rp1,254 per share [50]. Halving it, at the current discount, implies Rp1,512. Holding the asset value flat and returning to the 2021 discount implies Rp2,995. The single sell-side target in the corpus, Rp2,850 from the one contributing broker, sits between those and corresponds to a 35.9% discount to published net asset value or 41.8% to the March construction [51]; it is a discount-narrowing forecast, not an asset-value forecast, and it comes from a broker that cut its own target from Rp3,000 to Rp2,600 in July 2025 [52].

The evidence supports treating the discount as a claim on Saratoga's structure rather than on its marks. Estimation risk in the portfolio is bounded at Rp822 per share on the widest definition, tax at Rp151 and the manager's cost at Rp171, which together account for roughly two-fifths of a Rp2,684 gap; the remaining Rp1,539 is applied to stakes carried at prices anyone can look up. The strongest fact against reading that as mispricing is the direction of travel: the discount has widened in three of the last four years, the company's own record of divestments carries no exit from the four core holdings in thirteen listed years (Realisation Record), the 2025 financing cash flows contain no treasury purchase in the year of the widest year-end discount in the five-year series [53], and PT Unitras Pertama, Edwin Soeryadjaya and Sandiaga Uno together hold 89.00% of the register against a 10.74% public float [54]. A gap that persists through a doubling and halving of the underlying is more plausibly a price for illiquidity and control than an error waiting to correct.

What would change that read, in either direction: a disposal from the core four at or near the marked price, a buyback sized against the discount rather than against the incentive plan, or a formal payout ratio replacing the discretionary policy would each convert net asset value into something a minority holder can reach, and would justify a narrower discount. A second year of dividend income falling with coal, or a Level 3 write-down that arrives through a transaction rather than a model, would justify a wider one.

Two limits on all of the above. External web research was unavailable for this chapter, so no Indonesian government bond yield, no peer holding-company discount and no post-March-2026 corporate action could be checked against the arithmetic; the rate anchor used here is Saratoga's own borrowing cost, taken from its accounts. And the published net asset value table sits outside the audit opinion, which covers the consolidated financial statements only [55] — every discount in this chapter is measured against a number management publishes and the auditor does not sign.