GOTO Gojek Tokopedia (GOTO IJ)

Scaling up GTF to Maximize Value in Both Merger and Standalone Scenarios

• In our view, the likelihood of a GOTO-GRAB merger is high, pending developments in GOTO structure to maximize shareholders’ value.
• Spinning-off Gojek potentially offers GOTO liquidity for dividends to shareholders, unlocks GTF’s potential, and offers exit opportunities.
• We remain confident in GOTO’s current format with GTF turning EBITDA positive in 4Q24 and lift our TP to Rp110, implying a P/S of 7.1x.

High chance for GOTO-GRAB merger waiting circumstances to mature

Recent media articles have extensively covered scenario of GOTO and Grab merger, likely driven by activist shareholders, escalating scenarios from a merger to an acquisition of GOTO at Rp100-120. We believe GOTO Holding would benefit from selling Gojek to GRAB, which we think may potentially be done at a premium, as it is the key asset for GRAB to unlock profitability in Indonesia. We believe part of the proceeds could be distributed as dividends to reward shareholders. Additionally, better liquidity in GOTO can be directed to strengthen GTF and offer new exit opportunities. This scenario assumes GRAB will seek to avoid an MTO unless an alternative structure is agreed upon, such as acquiring a portion of MVS (total MVS hold 54% effective control in GOTO).

Scenario to maximize GOTO shareholders value

We believe the anticipated scenario is for GOTO to sell Gojek to GRAB at a favorable valuation, securing cash proceeds to be distributed as dividends and securing better liquidity at the holding level. Spinning off Gojek, would allow GOTO to focus on unlocking value and driving stronger valuation in GTF. DealStreetAsia has reported that GTF will not be included in a GRAB deal, reinforcing our scenario. Moreover, this separation would allow cloud-native GOTO to pursue its AI agenda in B2C with initiatives such as DIRA and Sahabat AI, and possibly in B2B with AI training and inferencing at lower hardware costs. Ultimately, a merger deal depends on GTF’s ability to scale as a standalone unit and extract value from partner ecosystems. GOTO indicated that GTF has turned EBITDA positive in 4Q24, suggesting progress in the right direction. Mgmt. has also committed to disclose more KPIs to strengthen its investment case.

GOTO reaching a new milestone with GTF Positive, Upgrading TP to Rp110

We remain positive on GOTO’s current structure amid its still positive outlook for ODS GMV growth and steady EBITDA margin increments. Moreover, as GTF turned EBITDA positive in 4Q24 (vs. prior expectations of breaking even in 2Q25) we have adjusted our loan growth projections in our DCF valuation, now expecting it to double in FY25F to Rp10.5tr (from Rp4.3tr in 9M24), and adjust our FY24-26F adj. EBITDA by +112%/5.9%/3.0%. As a result, we lift our TP to Rp110, implying a P/S multiple of 7.1x, and maintain our BUY rating on GOTO.

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