Company Update

02 Mei 2023

GOTO IJ - MNC Sekuritas Equity Report May 2, 2023

Radical Profit Formula Successfully Executed

Key Takeaways :
▪️GOTO achieved a positive contribution margin (CM) of IDR636 bn in 1Q23, with adjusted EBITDA growing by +49% QoQ/+67% YoY. This was driven by higher take rates, cost-cutting strategies, and on-demand services. Fintech and e-commerce segments both posted positive CMs, with fintech growing its take rate and GTV.

▪️The company aims to achieve positive adjusted EBITDA by 4Q23, with a projected 25-30% quarterly improvement rate.

▪️The company's focus has shifted from GTV growth to solidifying business fundamentals by monetizing, optimizing costs, and focusing on profitable customers.

▪️GOTO's fintech business is expected to be a key driver going forward, with its high-margin nature and plans to scale up loan book origination.

▪️GoTo Logistics (GTL) aims to deliver a more competitive cost-to-serve fulfillment and logistics by saving at least 30% of cost imposed to customers, complementing GOTO's ecosystem.

▪️ We recommend BUY for GOTO IJ at a TP of IDR168, implying 10.0x EV/revenue. Downside risks include: 1) higher for longer interest rates, 2) failure to keep profitability guidance and 3) sharp decline in economic activity that trigger valuation de-rating.

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