Let’s Break The Disruptive Challenge!
Performance Recovery in 1H18
BIRD posted a -5.3% YoY decline in revenue, to Rp1.97 trillion in 1H18. Lower revenue was
caused by taxi segment which decreased by 5.5% YoY amounting to Rp1.6 trillion, where
the taxi segment contributes 81% to total revenue. Meanwhile, the vehicle rental segment
also settled by 4.3% YoY. Net income also decreased slightly, by 1.3% to Rp.191.7 billion in
1H18. Considering the downward trend in net profit which is decreased by –48.4% YoY in
1H16, but better performance in 1H17 with weaken net income by -15.6% YoY, we
consider the downward trends experienced by BIRD since 2016 will see recovery as
happened in 1H18.
Positive Catalysts from the 2018 Asian Games
In order to overcome traffic congestion in Jakarta and welcome the 2018 Asian Games, an
odd-even rule was applied, which several sections of principal Jakarta arteries are limited
to private vehicles with number plates that fit (either an odd or even number, depending
on the date). Therefore, Bluebird enjoyed an increase in August 2018 (1-month odd-even
trial), at Rp597 thousand per fleet/day (vs. Rp589 thousand per fleet/day in July 2018).
How to Tackle the Disruptive Challenge
The emergence of online taxis in 2016 led to a decrease in BIRD performance. However,
with the retreat of Uber's online transportation platform from Southeast Asia in May 2018,
and the weakening of the performance of competing companies for conventional taxis,
the number of four-wheeled public vehicle market players are thinning out. In addition,
once a minimum online taxi fare was set,the difference in online taxi rates (Go-Car and
Grab) and BIRD taxi fares became inconsequential.
Recommendation: Buy with Target Price IDR3,500
We recommend a BUY for BIRD at a target price of Rp3,500, which represents an implied
PER at a 18.88x / 18.05x level for FY18E/FY19F. BIRD is traded at a level below the average
trade price for the last 3 years, with a PER of 13.77x (October 24, 2018) which is in the STD
-0.5 quadrant in the PER band. We consider that BIRD's performance will improve, along
with the increasingly thin tariff difference with online taxis.
