TLKM
Contact our analyst Eka
30th June, 2021
BUY
Price Rp 3,160
Target price Rp4,030
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
Valuation: Maintain BUY with TP 4,030
- 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.
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