Undemanding Valuation amidst FMC Opportunities
Key Takeaways :
• EXCL IJ experienced a revenue increase of 8.9% YoY to IDR29.1 tn, led by the data and digital services segment (+11.6% YoY), which contributed 91.1% of total revenue.
• The company's total subscribers slightly declined to 57.5 mn (-0.7% YoY), but there was an increase in monthly data usage per user to 12.2 GB (vs 10.7 GB in FY21), indicating higher demand for data services.
• EBITDA increased by 7.1% YoY to IDR14.2 tn, but margins were slightly reduced to 48.9% (vs 49.7% in FY21) due to increased interconnection and other direct expenses (+87.3% YoY). Meanwhile, net profit declined to IDR1.1 tn (13.9% YoY), primarily due to higher interest expenses (+16.8% YoY); however, a rights issue in Dec-2022 is expected to save around IDR300 bn in interest expenses for FY23E.
• EXCL is well-positioned to capitalize on the growing demand for Fixed-Mobile Convergence (FMC) products, with plans to reach 150k XL SATU subscribers by FY23E.
• We expect EXCL's FY23E top/bottom line to be IDR31.2 tn (+7.2% YoY)/IDR1.4 tn (+29.1% YoY), driven by increased data demand, higher ARPU, and a decrease in gearing ratio.
• We recommend BUY for EXCL, with a TP: of IDR2,500 which implies EV/EBITDA of 5.3x in FY23E. Downside risks include interest rate hikes, data tariff wars, Rupiah devaluation, and higher expenses due to FMC adoption.
Read MNCS EXCL Equity Report at : https://tinyurl.com/MNCS-EXCL-28Mar23
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