Company Update

06 November 2023

GOTO IJ - MNC Sekuritas Equity Report November 6, 2023

A Transformative Stride Towards Achieving Profitability


Key Takeaways :
▪️ GOTO scored an exceptional 9M23 performance, securing a gross revenue of IDR17.8tn, growing 7.0% YoY (vs IDR16.6tn in 9M22), largely attributed to their take rate jump to 4.0% (vs 3.7% 9M22).

▪️ The contribution margin reached a positive value of IDR2.8tn (vs IDR-5.7tn in 9M22), thanks to the slash in sales and marketing expenses to IDR3.8tn (vs IDR9.7tn in 9M22), and resulted in a +70.9% YoY growth in 9M23’s adjusted EBITDA.

▪️ GOTO rolled out the first multimodal, bike-train-bike ride hailing service in the world called GoRide Transit, involving the KAI commuter line in their partnership, expected to contribute to more GTV growth.

▪️ The fintech segment grew 44% QoQ, with the buy-now-pay-later loan outstanding value having reached IDR1.4tn. Their strategic collaboration bore GoPay Tabungan by Jago, successfully attracting 200k users and have recorded >1mn transactions since its launching in Oct-23, and is to face more growth along growing credit demand, driving GOTO's GTV along with it.

▪️ Management elaborated that the abortion of the international IPO was due to their improving financial performance, providing the company with sufficient cash reserves. They possess a solid balance sheet posture, with their cash, cash equivalents and short-term deposits amounting to IDR25.2tn in total as of 9M23.

▪️ We recommend BUY on GOTO with a lower TP of IDR102/share (+46% upside) given the unfavorable macro factors, notably the era of high interest rate. GOTO targets budget consumers with 'Mode Hemat' products and enhances the GoPay app, anticipating growth in the fintech sectors. Downside risks: 1) sustained high interest rate, 2) failure to maintain profitability guidance.


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