Daily Brief Indonesia: Indo Tambangraya Megah, GoTo and more

In today’s briefing:

ITMG Q3 2022: 25% FY22 Dividend Yield 40% of Mkt Cap in Cash, Coal Stronger For Longer
GoTo: Long-Term Profitability Is Worrying
GoTo IPO Lockup Expiry – US$13bn Lockup Release or in Other Words, the Real IPO

ITMG Q3 2022: 25% FY22 Dividend Yield 40% of Mkt Cap in Cash, Coal Stronger For Longer

Coal stronger for longer is making Indo Tambangraya Megah (ITMG IJ) a significant value investment with 40% of the market cap in cash and 2.5x PE FY22 after going ex-dividend.
The company continues to churn out 6-7% of the market cap in cash every month, with coal prices at Newcastle over 300$/ton (current spot at 350$/ton).
Paying out >70% of its profits, the company trades at a 25% dividend yield at the very least, with a normalized yield of 10% at a 130-150$/ton coal price.

GoTo (GOTO IJ) reported 3Q2022 results on Monday. Gross revenue increased 30.4% YoY to IDR5.9trn while adjusted EBITDA (losses) dropped to 81.3% of net revenues vs 289% in 3Q2021.
There has been notable improvement in the company’s earnings (decline in losses in particular) driven by huge cost cuts on promotions which helped reduce losses.
However, cutting down promotions/marketing costs could lead to drop in top line growth and market share.

In Mar 2022, GoTo raised around US$1bn from what was essentially a domestic Indonesian IPO. Its pre-IPO shareholders will be released from their lockup soon.
GoTo was formed in May 2021 as a result of a merger between two of Indonesia’s largest unicorns Gojek, leading player in ride hailing, and Tokopedia, leading e-commerce player.
In this note, we will talk about the upcoming lockup expiry.

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