TLKM
Contact our analyst Eka
26th April 2024
BUY, 53% upside
Price Rp 3040
Target price Rp4,650
BUY, 53% upside
Price Rp 3040
Target price Rp4,650
Steady Growth Maintained
- TLKM reported a modest revenue increase of 3.7%, reaching IDR 37.4 trillion in Q1 2024. The data, internet, and IT services business segment continues to be TLKM's primary revenue driver, with a year-over-year (YoY) growth of 11.3% to IDR 22.1 trillion, buoyed by robust growth in mobile data services and a data traffic increase of 9.3%. However, the Average Revenue Per User (ARPU) remained steady at IDR 45 thousand.
- IndiHome revenue fell by -4.6% YoY to IDR 6.9 trillion in Q1 2024, primarily due to the reclassification of IndiHome enterprise (B2B) revenue recognition to the Data, Internet & IT services category starting in Q1 2024. Despite this, the ARPU stood at IDR 243 thousand, with subscriber numbers reaching 8.916 million.
- To enhance customer satisfaction and maintain market share dominance, TLKM launched Telkomsel Lite in March 2024. This sub-brand offers an affordable starter pack with a larger local quota bonus, targeting the competitive markets in Java and aiming at the low-to-middle income segment.
- As TLKM continues to defend its market share and competitiveness, we anticipate further growth in subscriber numbers, coupled with a gradual increase in ARPU.
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Q1 2024 Results: Quarterly improvement
Valuation: Maintain BUY with TP 4,650
- TLKM showed improved margins quarter-over-quarter, though still lower compared to Q1 2023.
- The company's profit for Q1 2024 was IDR 6.05 trillion, reflecting a 19.6% quarter-over-quarter increase but a -5.8% decline YoY. This performance is attributed to a -17.3% YoY reduction in general & administrative expenses to IDR 1.5 trillion, while personnel expenses grew by 10.4% YoY due to increases in employee income tax related to religious holiday allowances. Consequently, TLKM's Net Profit Margin (NPM) rose to 16.2% in Q1 2024 from 13.3% in Q4 2023.
- Operating profit decreased by -3.7% YoY but increased by 17.52% quarter-over-quarter to IDR 11 trillion, resulting in a higher quarterly Operating Profit Margin (OPM) of 29.4%.
- Additionally, TLKM incurred an unrealized loss of IDR 403 billion from the change in the fair value of its investment in GOTO in Q1 2024, compared to an unrealized gain of IDR 430 million in Q1 2023.
Valuation: Maintain BUY with TP 4,650
- Our target price for TLKM is IDR 4,650, representing a 53% upside potential. This target is based on a one-year forward P/E ratio of 17X. Our recommendation to BUY is maintained based on these projections..
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