TLKM Jun2021

TLKM

Contact our analyst Eka

30th June, 2021
BUY
Price Rp 3,160
Target price Rp4,030

IndiHome Double-digit growth

In 1Q2021, TLKM recorded a revenue decrease of -0.7% YoY to IDR 33.9 trillion. Data, internet & IT service contributed the most with 53.5% of total revenue and +2.2% YoY growth.
IndiHome maintained double-digit growth of 25% YoY to IDR 6.3 trillion, with a higher revenue contribution of 18.7% from 14.8% in the same period last year.
The growth is inline with the increase in IndiHome new subscribers. Indihome added +133 thousand new subscribers, +12.3% YoY to 8.15 million in 1Q2021. ARPU also increased +1.5% QoQ to IDR 266 thousand in 1Q2021.
SMS, Fixed and Cellular voice revenue declined by -25.4% YoY to IDR 5.3 trillion.
Interconnection revenue also declined -11% YoY to IDR 1.8 trillion in line with declining legacy international voice business.
Telkomsel officially launched a 5G service on May 27, 2021, the first cellular operator to offer 5G in Indonesia.
We expect demand from data centers, Cloud, Application services, fixed broadband, interconnection will increase this year as work from home and school from home continue.

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1Q2021FY Results: Margin Continue to Improved

Despite lower revenue, TLKM maintained positive profit growth +2.6% YoY in 1Q2021 to IDR 6.01 trillion with a higher NPM of 17.7% from 17.1% due to cost efficiency in 1Q2021.
EBITDA also grew +0.3% YoY to IDR 18.8 trillion in 1Q2021, with EBITDA margins expanding to 55.4% from 54.9%.
Operating expenses declined by -1.9% YoY to IDR 15.1 trillion in line with lower interconnection expenses down by -25.2% due to the declining wholesale voice business. G&A expenses also decreased by -17.7% YoY due to improved collection of receivables.
We still expect flat to slightly positive-growth in 2021F net income as the current trends continue and drive growth of mobile and broadband.

Valuation: Maintain BUY with TP 4,030

We are targeting TLKM to reach IDR 4,030, 27.5% upside, which is a 16.4x PE valuation within one year. We maintain our recommendation to BUY.

Previously

TLKM May2021