TLKM
Contact our analyst Eka
20th May 2022
BUY
Price Rp 4,210
Target price Rp5,700
BUY
Price Rp 4,210
Target price Rp5,700
Positive Growth Maintained
- TLKM maintained positive growth in 1Q2022, with revenue up +3.7% YoY to IDR 35.2 trillion.
- IndiHome continued to be a growth driver with +7.9% YoY growth to IDR 6.9 trillion in 1Q2022. The growth is inline with the increase in IndiHome new subscribers and a higher ARPU. Indihome added +136k new subscribers in 1Q2022, so total subscribers are now 8.7 million. IndiHome ARPU was also higher at IDR 268k an increase of +7.6% YoY driven by revenue from add-ons that grew by +15.6% YoY.
- Data, Internet & IT service revenue increased +3.3% YoY to IDR 18.9 trillion in 1Q2022, boosted by higher cellular data revenue. Mobile data traffic jumped by 19.2% YoY driven by strong mobile data services.
- Interconnection revenue increased by 16.8% YoY to IDR 2.1 trillion. Network and other telecommunication services revenues jumped by 15.3% YoY to IDR 2.6 trillion driven by increasing satellite and tower business
- As the transition from legacy business to data continues, SMS, fixed and cellular voice revenue declined -9.6% YoY to IDR 4.7 trillion.
- We are targeting TLKM revenues to reach IDR 150.3 trillion this year as we expect demand growth will continue in line with IndiHome growth plus a tariff hike in April 2022.
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An Unrealized loss from GoTo
Valuation: Maintain BUY with TP 5,700
- •TLKM net income grew slightly +1.7% YoY to IDR 6.1 trillion with a NPM of 17.4%. Profit was held back by an unrealized loss from investment in GoTo. If we take that out, TLKM net income would have been IDR 6.7 trillion or up by +11.3% YoY.
- Operating profit decreased -9.3% YoY to IDR 10.6 trillion as the operating profit margin decreased to 30.1% in 1Q2022. TLKM expenses increased by 10.6% YoY with operating expenses +4.5% YoY. Depreciation and amortization expenses rose +9.5% YoY to IDR 8 trillion in line with continuous investments to enhance TLKM digital infrastructure for both mobile and fixed line businesses.
- EBITDA rose by +3.1% YoY to IDR 19.4 trillion with a higher EBITDA margin of 55.1%.
- For 2022F, We are expecting TLKM bottom line to reach IDR 26.4 trillion.
Valuation: Maintain BUY with TP 5,700
- We are targeting TLKM to reach IDR 5,700, 35% upside, which is a 20x PE valuation within one year. We maintain our recommendation to BUY.
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