GOTO Gojek Tokopedia (GOTO IJ Rp68; BUY; TP Rp120) Aiming for leadership in the fintech market

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GOTO Gojek Tokopedia (GOTO IJ)

Aiming for leadership in the fintech market

GOTO is building a first mover advantage to become the preferred provider for Tiktok/Tokped (TTTP) and its 138mn/18mn user base.
FY24F ODS growth guidance of ~15% offers upside; together with TTTP fee positive EBITDA, GOTO can turn Gopay into a robust lending engine.
We cut our adj. FY24/25F EBITDA by 55%/35% on higher Fintech costs (0.54% of GTV vs 0.34% prev.); Maintain Buy with a lower TP of Rp120.

GOTO aims to become Tiktok’s preferred fintech provider post-Tokped era.

Tokped was deconsolidated from 1 Feb24 and TTTP will deliver service fee revenue and EBITDA estimate of ~Rp50bn/month initially to accumulate ~Rp550bn/(~US$37mn) in FY24 (based on GOTO mgmt’e est.). This will be accompanied by ceasing the Logistics vertical (officially in 2Q24, though we reckon effectively in 1Q24). GOTO expects the compliance of the new TTTP platform with the Trade Ministry regulation to be completed in early Apr24. This, in turn, will signal a cycle for GOTO’s full suite of fintech services and BNPL, by penetrating into the TTTP base (134mn/18mn users). Gopay has thus far been making a strong run, reaching 15mn active users in Feb24 (58% cmgr) and palpable growth in downloads (33% cmgr) since being launched in Apr23, (source: Data.Ai.) aiming at originations for BNPL & cash loans.

Positive surprise in the FY24 ODS growth target by offering differentiation

We welcome the shift in the ODS strategy through offering differentiation to premium services (comfort seats, faster), with Gojek making an opening to both mid and low-end segments. Thus, we believe a mid-teens GTV growth rate is in close range whilst we see a 23%+ take rate as the new floor, with possible +100bps in the following qtrs. We see a possibility also that Gojek may try to upgrade its 2W-4W fleet with new vehicles, offering drivers better take-home rates.

Building a sustainable fintech moat on the ODS and TTTP fee foundations.

GOTO’s robust turnaround has delivered positive EBITDA by 4Q23, better than our expectations. Nonetheless, we expect OPEX will be volatile in the next 3-4 quarters to transform Gopay into a low NPLs scalable engine. Combined, these factors signal sustainability and efforts to create shareholder value. We raise our FY24/25F revenue forecast by 8%/20% to include higher ODS GTV growth of 15% cagr 2023-25 (+700bps), increasing the blended take rate by 20bps by 4Q25, and lower TTTP service fees in Feb24. Our forecast expects ODS and TTTP fees will preserve EBITDA positive at the GOTO level in FY24.

Bridging investor concerns with value creation efforts.

We maintain our Buy rating as we see GOTO is paving a credible pathway for value creation but our new TP is lower at Rp120 (Rp125 previously) using P/S of 2.8x in ODS, 7.7x in Fintech (20% applied discount to peers) and 15x EV/EBITDA in TTTP. The key downside risk is TTTP uses a larger number of fintech providers, but the Gopay app has made an early strong run to build sustainable advantages.

… Read More 20240325 GOTO