TLKM
Contact our analyst Eka
14th November 2023
BUY, 41% upside
Price Rp 3520
Target price Rp5,000
BUY, 41% upside
Price Rp 3520
Target price Rp5,000
Stable Revenue
- The data, internet, and IT services business segment remain TLKM's primary revenue driver, experiencing a +2.9% growth, reaching IDR 19.9 trillion in 3Q2023. Over 9M2023, the segment recorded a +4.8% YoY growth, with revenue totaling IDR 63.4 trillion. This growth is attributed to robust growth in mobile data services, with data traffic increasing by +9.3%. Although ARPU underwent a -2.2% QoQ adjustment to IDR 48.6 thousand, it is expected to remain stable in the future.
- IndiHome exhibited a +4.8% YoY growth, with revenue reaching IDR 7.4 trillion in 3Q2023, and IDR 21.78 trillion for 9M2023, driven by new subscribers, totaling 589 thousand and reaching 9.8 million, with ARPU at IDR 256.6 thousand.
- TLKM's total revenue registered a +2.4% growth in 3Q2023, reaching IDR 37.76 trillion, and IDR 111.2 trillion with +2.2% growth in 9M2023, aligning with our forecast of IDR 150 trillion for 2023.
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3Q2023 Results: Higher Margin
Valuation: Maintain BUY with TP 5,000
- TLKM demonstrated improved margins post the spin-off of IndiHome into Telkomsel.
- In 3Q2023, TLKM's profit reached IDR 6.74 trillion, the highest in a year, reflecting a 106% YoY or +6.5% QoQ growth. This growth is attributed to a -8.7% YoY reduction in operating expenses to IDR 25.8 trillion, with lower general and administrative expenses by -27% YoY and marketing expenses by -14% YoY. Consequently, TLKM's NPM increased to 17.9% in 3Q2023, and the NPM for 9M2023 also improved to 17.5%.
- Operating profit increased by +38.5% YoY or +3.2% QoQ to IDR 11.9 trillion, resulting in a higher OPM of 31.7%.
- Additionally, TLKM incurred an unrealized loss of IDR 594 billion from the change in the fair value of its investment in GOTO in 3Q2023, compared to an unrealized gain of IDR 412 million in 1H2023, as GOTO's market price was IDR 85 per share at 9M2023.
Valuation: Maintain BUY with TP 5,000
- We anticipate continued expense reduction through the end of 2023, leading to improvements in operating and capital expenditure efficiency, thereby positively impacting the profit margin.
- Our target price for TLKM is IDR 5,000, representing a 41% upside. This target is based on a 19X PE valuation within one year. Our recommendation to BUY is maintained.
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