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Get Profit Fast, GOTO Shares Recommended by Mandiri Sekuritas

Get Profit Fast, GOTO Shares Recommended by Mandiri Sekuritas

Medan, Andrianus.my.id --PT Mandiri Sekuritas (Mansek) released the latest research on the shares of PT GoTo Gojek Tokopedia Tbk (GOTO) following the parent companies Gojek, Tokopedia and GoTo Financial which released their third quarter 2022 financial reports which were beyond analysts' expectations.

Two Mandiri Sekuritas analysts, namely Adrian Joezer and Ryan Aristo, gave a buy recommendation for GOTO shares with a target price of IDR 415/share. The target price is 98 percent above the GOTO share price during Mansek's research, which was calculated at the level of IDR 210/share.

"We provide a buy recommendation for GOTO shares with a target price of IDR 415/share. In our opinion, the third quarter performance results very much show that GOTO's execution is very fast in achieving the target time to profit," said Adrian and Ryan's statement in their research as of November 22, quoted on Thursday. (24/11).

Some of Adrian and Ryan's considerations in assessing this buy recommendation include a much smaller quarter on quarter (QoQ) loss rate in QIII/2022, which indicates that GoTo can gain profits more quickly.

The GoTo report recorded an adjusted EBITDA loss of IDR 3.7 trillion, down 11 percent from the same period the previous year and 10 percent less from the second quarter of 2022, which was IDR 4.1 trillion. That means, GoTo scored its third consecutive quarterly EBITDA loss-adjusted improvement.

On Monday (21/11) evening, GoTo management mentioned the possibility of accelerating the breakeven timeline for a positive contribution margin, reaching 1-2 quarters of the 1/2024 quarter target. Thus, GoTo is estimated to be able to score a positive contribution margin faster than Mandiri Sekuritas estimates, namely in the third or fourth quarter of 2023.

Contribution margin is the ratio of the value of the profitability of each product in the company, before deducting headquarter costs or operational expenses .

Previously, GoTo Group Main Director Andre Soelistyo said the company recorded strong performance in the third quarter. This succeeded in accelerating profitability gains, as revenue grew and loss-adjusted EBITDA reduced.

"Group contribution margins exceeded the guidelines we conveyed in the previous quarter, with a positive contribution margin in the on-demand service segment (Gojek) achieved in September, much faster than the target," said Andre, Monday (21/11).

Adrian and Ryan's next consideration is an increase in the gross transaction value or GTV ( gross transaction value ) amid the company's efforts to reduce incentives and macroeconomic factors, which reached IDR 161 trillion, up 33 percent from the same period last year and exceeded the target of IDR 151 trillion to IDR 156 trillion. .

In addition, QIII/2022's gross income also rose 30 percent from the same period last year reaching Rp. 5.9 trillion, reaching the upper guideline limit set between Rp. 5.7 trillion to Rp. 6.0 trillion.

During the nine months of this year, GTV GoTo reached IDR 451.47 trillion from the same period last year IDR 324.94 trillion (proforma), up 38.94 percent, while gross revenue also rose 42.01 percent, from IDR 11.71 trillion previously. (proforma) to IDR 16.63 trillion.

The performance achievement is close to GTV's record and gross income over the past year. In 2021, the company's GTV will penetrate IDR 461.60 trillion, with gross revenues reaching IDR 17 trillion.

Synergy Efficiency and Strengthening

The next thing that has also caught Adrian and Ryan's attention is the efficiency and cost savings that the company has consistently made. From its performance for nine months in 2022, GoTo identified a potential savings in operating expenditure ( operating expenditure ) or fixed-cash-opex of 14 percent.

This potential is beyond the previous savings of IDR 144 billion.

Based on a pro forma basis for nine months, the savings that can be made are IDR 775 billion from staffing expenses (IDR 1 trillion annually) and IDR 271 billion from non-staffing items (IDR 400 billion annually).

When combined with the realization of savings measures that have been taken during 9M-22, the 9M-22 pro forma cost savings should be equivalent to IDR 1.2 trillion or could reach IDR 1.6 trillion on an annual basis, equivalent to 16 percent of the 9M- opex fixed-cash cost savings 22.

Last Friday, GOTO reduced employees by 12 percent or the equivalent of 1,300 people.

The third consideration for Mansek recommending GOTO shares is strengthening ecosystem synergy and monetization with a focus on core business and product-based initiatives.

The take rate (commission) is still the same on a quarterly basis, namely 3.7 percent in QIII/2022, driven by the contribution of on-demand services and the take rate of the e-commerce business (Tokopedia), which increased by 0.6 ppt and 0.0. 1 ppt to 22.2 percent and 3.2 percent on a QoQ basis.

Business crossover or cross-pollination through GoPay Coin has shown positive results in optimizing the level of use and consumer acquisition or LTV/CAC ( customer lifetime value / customer acquisition cost ), while GoPay user penetration has reached 60 percent in Gojek and 58 percent in Tokopedia.

In addition, GoTo has a BNPL service or buy now pay later (GoPayLater Cicil) which was released in July 2022, where GOTO entered 4 million customers with eligible status and will increase its loans in 2023. In addition, the company has also started a cash loan trial at the beginning October 2022.

GoTo CEO Andre said that the performance achievement in the third quarter of 2022 was driven by the company's focus on providing the best products to loyal customers, as well as GoTo's discipline in managing operating expenses efficiently.

For example, the expansion of the GoPay Coins service directly encourages the rationalization of promotional expenses, while at the same time giving appreciation to consumers who use the GoTo service.

"The improvement in operating margins is in line with the company's revenue growth, which shows the resilience of our business and the strength of the Indonesian economy. The results of financial and operational performance this quarter confirm that the company is on the right growth path as the largest digital ecosystem in Indonesia," Andre said in an official release. .

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