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Bukalapak: Bargain basement

  • We reiterate our Buy recommendation on Bukalapak with a target price of IDR456 ahead of its Q2 results on 29 July

  • Having lost 74% from its peak, the firm is now in deep value territory. Net cash represents 65% of its market cap

  • We expect its EBITDA margins to improve by 41% in FY 21-23. The Q2 results will pave the way to EBITDA positivity

Bukalapak: Bargain basement
Nirgunan Tiruchelvam
Nirgunan Tiruchelvam

Head of Consumers Equity Research

Tellimer Research
26 July 2022
Published byTellimer Research

We reiterate our Buy recommendation on Bukalapak, with a target price of IDR456. This implies an upside of 62%.

Bukalapak is reporting its Q2 results on 29 July – we expect the results to pave the way for EBITDA positivity in FY 23.

Scale economics improving

We envisage the scale economics for Bukalapak improving in both of its key segments, the Mitra platform and Marketplace services:

  • The Mitra platform provides small businesses in Indonesia with e-commerce access. Bukalapak operates an online-to-offline network (O2O) and has a strong presence outside Indonesia's tier 1 cities.

  • Bukalapak's Marketplace services are its e-commerce business in Indonesia's tier 2 and 3 cities.

We expect robust growth in both segments due to stronger O20 Mitra performance, and better monetisation and take rate, which we see rising in FY 22 and FY 23 as e-commerce takes more of a hold across Indonesia, allowing Bukalapak to charge higher commissions.

Bukalapak: Key operating metrics

Market share going up

Moreover, we expect a gradual rise in market share, driven by growth in tier 1 and 2 cities.

Bukalapak: Market share

EBITDA positivity on the way

We see a clear pathway to EBITDA positivity on the back of improving operating metrics.

Bukalapak: EBITDA (IDR mn)

Robust cash metrics

And Bukalapak stands out for other reasons:

  1. It is comparatively cheap, at 3x p/sales.

  2. And the clincher for the valuation argument is that the market appears to underappreciate Bukalapak's low cash burn rate and high cash balance. The firm has a net cash balance of US$1.3bn and we expect an average FCF burn of US$118mn in the forecast period, which would fund a cash burn of 10+ years.

Baby Amazon: Cash Runway (Months)


Bukalapak: DCF Valuation

Income, balance sheet and cash flow

Bukalapak: DCF Valuation

Bukalapak: Balance sheet (IDR mn)

Bukalapak: Cash Flow Statement (IDR mn)