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05 Agustus 2022

TLKM IJ - MNC Sekuritas Equity Report August 5, 2022

Better Results Amidst Inflation Risk
 
Stagnant Revenue with Mobile Data Price Hike
TLKM booked a revenue of IDR36.78tn in 2Q22 (+3.49% YoY), making the accumulated 1H22 revenue to be IDR71.98tn (+3.60% YoY), which slightly below our estimates (reaching 47.79%/47.74% MNCS/cons). This revenue growth was driven by its data, internet & IT services segment (+5.38% YoY) in the 2Q22 to IDR20.37tn. This was further seen from the increase on its data traffic by 21.4% YoY to 4,182TB in 2Q22 (+23.55% YoY). Meanwhile, Indihome was reported to book a revenue of IDR6.98tn (+6.86% YoY) supported by its number of subscribers which increased by 7.1% YoY to 8.87 mn subscribers, as well as stable ARPU at around IDR250k. While in the mobile segment, Telkomsel recorded a revenue of IDR22.32tn (+4.99% YoY) with its subscribers increased by +0.27% YoY or equivalent to 470,000 additional users to 169.67mn subscribers. Digital business segment grew by +7.03% YoY to IDR18.14tn, which contributed to 81.24% of Telkomsel's total revenue (vs 79.69% in 2Q22). Furthermore, Telkomsel was reported to have increased its data packages/bundles prices following other MNOs' price hike of their bundles, thus liable on its ARPU growth to IDR43k in 2Q22 (vs IDR41,000 in 1Q22).
 
EBITDA Margin Remained Stable
Moreover, EBITDA was booked at IDR20.06tn in 2Q22 (+5.85% YoY), or equivalent to IDR39.45tn of the accumulated revenue in 1H22 (+4.47% YoY), slightly in-line with our estimates and consensus (reaching 48.10%/49.40% MNCS/cons), while implying EBITDA margin to slightly increase to 54.55% in 2Q22 (vs 53.33% in 2Q21) or 54.80% in 1H22 (vs 54.35% in 1H21). The catalyst of this improved EBITDA came from the decrease in the G&A expense by -4.82% YoY in 2Q22 while its depreciation & amortization increased by 21.56% YoY, driven from the company's determination for improvement and expansion both in mobile and fixed line businesses.
 
Net Income Returned Double Digits
TLKM booked a net income of IDR7.19tn in 2Q22 (+11.73% YoY; +17.55% QoQ), or IDR13.31tn in 1H21 (+6.90% YoY), in-line with our estimates (reaching 50.29%/51.91% MNCS/cons). Therefore, this translates to net margin of 19.56% in 2Q22 (vs 18.11% in 2Q21) or 18.49% in 1H22 (vs 17.92% in 1H21). This was driven from the unrealized gain from TLKM's investment of GOTO IJ for IDR1.19tn in 2Q22 after previously, the company experienced a loss from the investment for IDR294bn in 1Q22, which dragged down the 1Q22 net income of IDR6.12tn.
 
Maintain HOLD with TP of IDR4,900
We maintain our HOLD rating on TLKM IJ with a TP of IDR4,900 which implied 5.60x FY22E EV/ EBITDA (close to mean of its 5-years mean). The positive catalyst in FY22E being: 1) Mobile data packages price hike; 2) HyperScale Data Center. Meanwhile, the downside risk include: 1) Rising USD currency; 2) Interest rate hike; 3) Net income mainly supported from GOTO IJ investment.
 
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