Second of Listed Companies Analysis goes to PT Telekomunikasi Indonesia (Persero) Tbk or we called in IHSG as TLKM. TLKM was build since 1965 with main business in Information Technology services and Telecommunication Infrastructure in Indonesia. Majority of TLKM shares are 52.09% Republic of Indonesia and 47.91% Public shares. Telkom listed not only in IHSG but also in NYSE (New York Stock Exchange) with code TLK. Telkom is the backbone of Indonesia’s telecommunication infrastructure that could reach most of the islands in Indonesia which other competitors not.
Telkom has a goal to become main choice to enrich the users in digital telco. As technology grows, Telkom also grows into digital business. Telkom divides the business into three main digital business domain:
- Digital Connectivity: Fiber to the x (FTTx), 5G, Software Defined Networking (SDN)/ Network Function Virtualization (NFV)/ Satellite
- Digital Platform: Data Center, Cloud, Internet of Things (IoT), Big Data/ Artificial Intelligence (AI), Cybersecurity
- Digital Services: Enterprise, Consumer
Key Financial Statistics of TLKM in IDR:
1Q20 Balance Sheet Cash: 25.599,0 B Total Asset: 241.914,0 B Short Term Debt: 64.046,0 B Long Term Debt: 51.321,0 B Total Equity: 130.943,5 B Income Statement Revenue 34.194,0 B Gross Profit 0 B Operating Profit 11.929,0 B Net Profit : 5.862,0 B EBITDA 18.778,0 B Interest Expense 1215,0 B Earnings Per Share 59.15 Price Earnings Ratio 50.72x Book Value Per Share 1277,45 Price to Book Value 2.35x Return on Asset 2,42 Return on Equity 4,63% Enterprise Value/EBITDA 20,61 Debt/Equity 0.91 Debt/Total Capital 0.48 Debt/EBITDA 6.14 EBITDA/Interest Expense 15.46
Several highlight of TLKM in 2020:
- New products By.U and Orbit show promising traction and can be a catalyst for TLKM to reach middle-lower class Indonesian. As of now, users reached 700.000++ (0.5% of total user TLKM) and in 3Q20 may reach 1 million. By this establishment, TLKM could competing more fiercely with FREN and could grasp a lot more Indonesian.
- Telkom Dividend in total IDR 15,26 T or IDR 154/Share. Telkom’s net income at IDR 18.66 T, 3.5% growth compared to 1Q19.
- TLKM have enormous infrastructure and network which turns as a competitive advantage in Telco Business. Telkom Financial Performance too is rigid, that’s why Telkom get AAA certified from Pefindo.
Current Target Price for TLKM:
|Kresna Securities||Buy Rating||4.950|
|Indo Premier Securities||Buy Rating||3.700|
|DBS Bank||Hold Rating||2.900|
|BNI Securities||Buy Rating||4,000|
|Morgan Stanley||Buy Rating||3,700|
|Deutsche Bank||Hold Raing||3,400|
|Bahana Securities||Buy Rating||4,000|
|RHB Research||Buy Rating||4,000|
|Panin Sekuritas||Buy Rating||4,000|
|Goldman Sachs||Buy Rating||3,650|
|Credit Suisse||Buy Rating||4,750|
|Ciptadana Sekuritas||Buy Rating||3,900|
13 out of 15 looks TLKM as an undervalued stock. As of today, 27 July 2020 TLKM at 3,040 which means there’s about 20-40% discount from the target price above. It’s a good investment because TLKM really take an important role in the new society with Digital become the new-norm. Indonesia’s predicted to be able to provide the vaccine by 2Q21 with current rate of testing is still the lowest (2k test/1 million population) by far in South East Asia compared to Singapore and Malaysia (27k test/1 million population). Covid landscape in Indonesia is still increasing, with the new incentive from the government related to burden sharing. Hopefully Indonesia’s economy could still be a trusted place for foreign to invest their money. TLKM still sleeping, hasn’t shown drastic improvement, buy while it’s cheap. We think 2970-3060 is the cheapest we could get.