Macquarie Research analyst Ari Jahja has slashed his sum-of-the parts target price for GoTo by 50% to IDR162 (1.4 cents) from IDR324 previously on the back of lower multiple assumptions across all segments.
The new target price implies 2023 EV/net sales of 6.7x or a slight expansion from consensus multiple of about 6x, notes Ari. “Valuation appears more reasonable after correction post its Nov 30 lockup period expiration, while public free float had risen to about 68% of shares,” he adds.
Goto anticipates its adjusted ebitda to become positive within 4QFY2023. Macquarie believes this could be achieved with about 10% gross transaction volume (GTV) growth for FY2023; 60-70 basis points blended take rate uptick; 30%-35% cut on promotion to customers; as well as 25%-30% opex reduction.
In line with Macquarie’s thesis, GoTo is getting more aggressive on cost cutting measures, Ari notes. The company had also raised its take rates — since 3QFY2022, Tokopedia’s take rate had increased due to a new commission scheme for consumer-to-consumer (C2C) merchants, the introduction of platform fees in July as well as the strong adoption of value-added services.
“GoTo has boosted Tokopedia's take rate further since Jan 2 for the C2C segment, of which will be followed by business-to-consumer from March 1 onwards. These underscore continued efforts to accelerate monetisation,” says Ari.
Macquarie has baked in slower Tokopedia GTV growth of about 7% for FY2023. This takes into account shifts in customer behaviour towards more offline purchases, impact from lower promotions spending, emerging competition from TikTok Shop’s rapid growth in Indonesia And high base effect y-o-y.
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That said, the firm’s checks suggest that consumer sentiment has been resilient so far, says Ari. “Our checks suggest that TikTok Shop has closed its gap with market leaders including Tokopedia on number of delivered parcels, although still below on average order value (AOV) basis.
“Nonetheless, Tokopedia's generally higher revenue exposure to core fast-moving consumer goods products compared to beauty-related products, along with middle-to-high income customer segment, might provide buffers in our view,” he adds.
Ari also highlights that rising take rates could be a key offset towards GoTo’s slowing GTV growth. According to Macquarie, Tokopedia’s AOV currently stands at US$25-US$30, versus Shopee’s high-single-digit US dollar and TikTok’s mid to single-digit US dollar.
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Macquarie raises its FY2023 and FY2024 net revenue estimates by 56% and 35% respectively, above consensus by about 16% to 8%.
As at 2.02pm Singapore time, shares in GoTo are trading IDR8 lower or 6.9% down at IDR108.
