GOTO Gojek Tokopedia (GOTO.IJ Rp 64; BUY TP Rp 90) Confirming growth trajectories in 9M24; Further monetization through tech advancements

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MLPT	33,975	2,350	7.43%
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ANTM	2,750	210	8.27%

GOTO Gojek Tokopedia (GOTO IJ)

Confirming growth trajectories in 9M24; Further monetization through tech advancements

9M24 adjusted EBITDA loss was reduced to Rp-13bn, supported by GTV growth, with 3Q24 at Rp137bn, on track toward FY24 profitability.
We anticipate further CM growth for ODS and GTF, driven by ODS GTV and loans with EBITDA margin expansion on cloud optimizations and AI.
We maintain Buy rating with a DCF-based TP of Rp90, assuming a 6% CAGR for FY24-34 GTV.

Strong 3Q24 momentum confirmed GOTO growth trajectories

In 9M24, GOTO reduced its YTD adj. EBITDA loss to Rp-13bn, supported by a sequential GTV increase in 3Q24. ODS, GTF, and ecommerce contributed incremental adj. EBITDA with improved variable costs (+14bps qoq), enabling GOTO to deliver 3Q24 adj. EBITDA of Rp137bn. Hence, the company is on track toward positive profitability (i.e., FY24 adj. EBITDA positive).

GOTOs explores growth in fintech and advertising amid steady competition

Mgmt guides for more ODS GTV growth in 4Q24, monetizing product expansion (albeit with less intensity, +~3% qoq). We believe this momentum will carry into FY25 (+13.7% yoy, in line with the 2024 Google-Temasek report), as GOTO and the sector see upsides in take rates from advertising. We conservatively assume stable ODS take rates of 21%+. We expect sequential GTF loan growth of ~+20% qoq, driven by consistent Gopay app downloads in underpenetrated markets. With new revenue streams, we expect variable costs to remain stable as a percentage of GTV, supporting continued contribution margin (CM) expansion in the medium term.

Cloud contract renewals and AI expected to boost EBITDA margins

GOTO aims to optimize cloud contracts with Alibaba, Tencent, and others, to improve adj. EBITDA margin (% of GTV). Mgmt expects the development of large LLMs to drive loan growth with steady NPLs at ~1%. While Indonesia's Personal Data Protection Law poses challenges for data analytics, we believe GOTO’s AI advancements and additional loan cycle data should drive loan growth, to leverage its partnership with TikTok to reach new customers. Below CM, we assume better efficiencies in FY25 recurring costs, to enable ODS to deliver 1.2%+ adj. EBITDA margin and GTF to deliver positive EBITDA.

Maintain Buy rating as GOTO unlocks tech growth

We maintain our Buy rating, supported by the attractive growth outlook for ODS and GTF. We also maintain our FY24-26F forecast and DCF-based TP of Rp90, assuming a 6% CAGR outlook for FY24-34 for ODS and GTF GTV. The stock trades at -1SD of its 2.5-year mean gross revenue multiple. Key risks stem from lower entry barriers and intensified competition.

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