TLKM Aug2022

TLKM

Contact our analyst Eka

9th August 2022
BUY
Price Rp 4,700
Target price Rp5,730

Maintained single digit growth

TLKM maintained positive growth in 2Q2022 driven by Indihome and Telkomsel digital, with sales up +3.5% YoY or +4.5% QoQ to IDR 36.7 trillion. For 1H2022 TLKM maintained single digit growth of +3.6% YoY to IDR 71.9 trillion.
IndiHome recorded +6.9% YoY growth to IDR 6.98 trillion in 2Q2022. The growth is inline with the increase in IndiHome new subscribers and a higher ARPU. Indihome’s total subscribers are now 8.89 million, up +7.1% YoY.
Data, Internet & IT service revenue increased +5.4% YoY to IDR 20.3 trillion boosted by higher cellular data revenue during the Eid celebrations and long holiday in 2Q2022. Mobile data traffic jumped by 21.4% YoY in 1H2022 driven by strong mobile data services.
Interconnection revenue also increased by 3.5% YoY to IDR 2.08 trillion in 2Q2022. Network and other telecommunication services revenues jumped by 17.5% YoY to IDR 2.77 trillion driven by increasing satellite and tower business.
As the transition from legacy business to data continues, SMS, fixed and cellular voice revenue declined -13.8% YoY to IDR 4.57 trillion.
We are targeting TLKM revenues to reach IDR 150.3 trillion this year as we expect demand will continue to grow.

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2Q2022 Results: Higher Margins

TLKM maintained double-digit net income growth of 11.7% YoY or +17.6% QoQ in 2Q2022 to IDR 7.19 trillion with a higher NPM of 19.6% from 17.4% in 1Q2022. For 1H2022, TLKM net income reached IDR 13.3 trillion or up by +6.9% YoY.
Operating profit increased +16.2% YoY or +3.4% QoQ to IDR 12.3 trillion, in line with a higher operating profit margin of 33.5% in 2Q2022.
TLKM operating expenses increased by 3.5% YoY to IDR 12.3 trillion with Depreciation and amortization expenses up +21% YoY to IDR 9 trillion in line with continuous investments to enhance digital infrastructure for both mobile and fixed line businesses.
EBITDA rose by +5.7% YoY to IDR 20 trillion in 2Q2022 and IDR 39.4 trillion in 1H2022 with a higher EBITDA margin of 54.8%.
As greater efficiency continues to improve margins, we are expecting TLKM bottom line to reach IDR 26 trillion in 2022F.

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Valuation: Maintain BUY with TP 5,730

We are targeting TLKM to reach IDR 5,730, 22% upside, which is a 20x PE valuation within one year. We maintain our recommendation to BUY.

Previously

TLKM May2022