Grasping the Momentum of Fiberization
Key Takeaways:
• TOWR’s net profit in 1H23 decreased by -7.8% YoY, reaching IDR1.6 tn (vs IDR1.7 tn in 1H22) due to increasing interest expense by +23.0% YoY. Yet, TOWR managed to report a higher revenue growth by +8.7% YoY, primarily driven by its FTTT (Fiber-To-The-Tower) segment (+92.9% YoY).
• We foresee TOWR’s market share to reach at least 30.5% by FY25F (vs 29.3% in FY22) as well as additional ~1.5k tenants in FY23E, following the consolidation of ISAT. We also anticipate for higher demand for FTTT where by FY25F will contribute 16.7% to the overall revenue, with a CAGR of 23.3% (FY22-FY25F).
• As of 1H23, the company has a DER of 3.4x, above the TowerCo average of 2.3x.
• We recommend HOLD with TP: IDR1,050/share (+6.1% upside), implying FY23E EV/EBITDA 9.9x. Downside risks: 1) USD/IDR currency; 2) high leverage; 3) consolidation of IOH.
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