Maybank Securities analyst Etta Rusdiana Putra has initiated “buy” on GoTo Gojek Tokopedia with a target price of IDR153 (1.4 cents).
In Putra’s report dated June 16, the analyst notes several positives including its market leadership being in the top two in Indonesia, the country’s digital economy being in its infancy, GoTo’s long-term growth outlook, as well as its services catering to the rising middle class, which means a potential market of 55 million to 60 million people.
“We forecast 77% revenue compound annual growth rate (CAGR) over FY2021 – FY2024 to IDR25 trillion in FY2024, driven by rising gross transaction value or GTV (16% FY2021 – FY2024 CAGR to IDR715 trillion) and a higher net take rate (fee) to GTV from 1.9% in FY2021 to 3.5% in FY2024,” he writes.
Competition between GoTo and Grab is also becoming more “rational” with both companies seeking paths to profitability. As such, the analyst is expecting to see sales and marketing rationalisation (from 2.3% GTV in FY2022 to 1.2% GTV in FY2024E), as efficiency is vital to profitability.
In addition, he expects GoTo’s adjusted ebitda to turn positive by FY2024 with several factors being the key to achieving a positive adjusted ebitda margin. They are, a higher net take rate, lower marketing expenses, as well as operational efficiencies.
“We believe GoTo is on the right trajectory, as it achieved positive ‘contribution margin’ in 1QFY2023,” he writes.
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To this end, Putra sees the sector de-rating, as well as GoTo’s shifting focus on achieving profitability as an opportunity to accumulate.
The analyst’s target price represents a 32% upside to GoTo’s current share price of IDR116 and translates to an FY2024 enterprise value-to-sales (EV/S) target of 5.6x. The valuation represents a 39% discount to GoTo’s peers’ average of an EV/S of 9.2x from FY2018 to FY2022.
Putra’s EV/S target is also roughly at a 19% premium to Grab at 4.7x EV/S FY2024.
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“Historically, GoTo traded at a premium to Grab (Grab’s lowest level was 4.7x EV/S versus GoTo at 14.7x EV/S during FY2018 – FY2022, per Bloomberg data),” he says.
“We think GoTo warrants re-rating for its focus on Indonesia, the largest Asean market, an integrated ecosystem with solid customer engagement, and economic reopening improving purchasing power and driving demand in On-Demand Services (ODS) and ecommerce, [as well as a] shift in management strategy to target profitability rather than growth,” he adds.
As at 12.19pm, shares in GoTo are trading IDR2 higher or 1.71% up at IDR119.
