TLKM Sep2021

TLKM

Contact our analyst Eka

3rd September, 2021
BUY
Price Rp 3,370
Target price Rp5,260

Strong Indihome and mobile growth

TLKM recorded a revenue increase of +9% YoY and +5% QoQ to IDR 35.5 trillion in 2Q2021. Indihome maintained double-digit growth of 23% to IDR 6.53 trillion. The growth is inline with the increase in IndiHome new subscribers and better ARPU. Indihome successfully added +152k new subscribers in 2Q2021, compared to 1Q2021’s +133k new subscribers. ARPU also increased +1.5% QoQ to IDR 270 thousand in 2Q2021.
For 1H2021, TLKM booked 4% YoY revenue growth to IDR 69.48 trillion. The results is on track to meet our forecast (98%).
Data, Internet & IT service revenue increased +9% YoY or 7% QoQ to IDR 20,4 trillion in 2Q2021, inline with higher data traffic of 3,306 petabyte on strong demand for mobile data services.
Network and other telecommunication service revenue increased +29% YoY to IDR 2.36 trillion in 2Q2021 mainly due to higher business volume in managed services and tower leases.
SMS, Fixed and Cellular voice revenue and Interconnection revenue declined in line with declining legacy international voice business and a transition from legacy to data.
As demand is still growing, we expect TLKM’s revenue in 2021F will grow by a single digit +4.4% YoY to IDR 142.5 trillion.

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Margin Continue to Improved

As TLKM’s revenue grew in 2Q2021, TLKM’s net income recorded double-digit growth of +25.5% YoY and +7% QoQ to IDR 6.43 trillion with a higher NPM of 18.1% from 15.7% due to cost efficiencies in mobile and fixed line. Operating profit margins also showed an improvement from 31.6% to 33.5% in 2Q2021.
For 1H2021, TLKM posted net income of IDR 12.5 trillion, up 13.3% YoY with a better NPM of 17.9% compared to 16.4% last year.
EBITDA also grew +4.7% YoY to IDR 37.8 trillion in 1H2021, and the EBITDA margin expanded to 54.4% from 54.0%.
As the cost efficiencies are resulting in improvements in 1H2021, we revise our TLKM bottom line target from single-digit growth to double-digit growth of 16% YoY to IDR 24.15 trillion in 2021F.

Valuation: Maintain BUY with TP 5,260

We are targeting TLKM to reach IDR 5,260, 56% upside, which is a 20x PE valuation within one year. We maintain our recommendation to BUY.

Previously

TLKM Jun2021