TikTok and Tokopedia said on 31 January 2024 they completed the merge of Tokopedia and TikTok Shop Indonesia under the existing Tokopedia entity. Maybank IB views this partnership as positive for GOTO as it firstly gains a 24.99% non-diluted share of Tokopedia, and can draw a service fee (which flows directly to EBITDA at minimal cost).
GOTO, meanwhile, posted an adjusted EBITDA positive 4Q23, and its FY23 earnings beat guidance and forecast. Moreover, GOTO is planning a share buyback (subject to regulatory and shareholder approval). With these positive catalysts, the house maintains its BUY Call on GOTO with a IDR110 TP.
Partnership with TikTok can create positive cycle
Maybank IB thinks the partnership between TikTok and Tokopedia is positive for GOTO, mainly as GOTO will have 1) a 24.99% non-diluted share in Tokopedia, 2) GOTO can draw a service fee (est. 0.4%) based on the core GMV of Tokopedia. This will flow directly to EBITDA, due to minimal cost.
Meanwhile, TikTok is committed to investing over USD1.5b to develop Tokopedia, propelling it to be one of the top three online shopping players in Indonesia. Moreover, GOTO can be the preferred partner for Tokopedia, accelerating growth for its on-demand services (ODS) and Fintech.
Positive 4Q23 adjusted EBITDA; GOTO share buyback
GOTO achieved positive adjusted EBITDA in 4Q23, exceeding its guidance (IDR3.8-4.5t loss per 9M23) and beating forecast of IDR6.0t loss in FY23E. GOTO also plans a share buyback as part of its capital management, subject to regulatory and shareholder approval. This is a positive catalyst.
Maintain BUY with TP of IDR110, the house believes the partnership with TikTok will strengthen GOTO’s position, and it may accelerate GOTO’s logistics and digital financial growth
