Equity Analysis /
Indonesia

Bukalapak: Bargain basement in EM tech, upgrade to Buy

  • We upgrade Bukalapak to Buy (from Sell) with a new target price of IDR456 that implies 48% upside

  • Net cash now represents (75%) of Bukalapak's market cap, after the firm lost 64% of its value since the August 2021 IPO

  • Bukalapak has made forays into banking and groceries, which would improve its prospects in these key segments

Bukalapak: Bargain basement in EM tech, upgrade to Buy
Nirgunan Tiruchelvam
Nirgunan Tiruchelvam

Head of Consumers Equity Research

Tellimer Research
28 March 2022
Published by

We upgrade Indonesian e-commerce firm Bukalapak to Buy from Sell, with a new DCF-based target price of IDR456 (up from IDR298 previously). Bukalapak has lost 64% of its value since its IPO in August 2021 and we think it now offers deep value.

We increase our FY22 and FY23 earnings forecasts for the firm, as we think its prospects should improve in light of its investment in Allo Bank and expansion into the groceries business.

5 key reasons for the upgrade

1) Higher earnings: We raise our earnings forecast for FY 22/23 by 5% as we see better growth prospects for the e-commerce business, boosted by its recent acquisition in the groceries space.

Earnings revision table (IDR mn)

FCFF Valuation

2) Strong cash reserves: Bukalapak has a net cash balance of US$1.64bn, which represents nearly 75% of its current market cap of US$2.2bn.

Comparables: Baby Amazons

3) Deep value: Bukalapak has lost 64% of its value since its IPO in August 2021. At its current share price of IDR308 (at market close on 25 March), it has now reached deep value territory and could emerge as a proxy for the ASEAN e-commerce expansion.

4) Allo Bank investment: Bukalapak has spent US$80mn to acquire a 12% stake in Allo Bank, the Indonesian digital-first financial services firm. There are tremendous synergies for Bukalapak’s 10mn micro, small and medium-sized enterprise (MSME) network. Bukalapak's marketplace segment is a business that connects Indonesia's corner shop network to the e-commerce network. The association with Allo Bank will help Bukalapak provide financing solutions to the marketplace customers.

5) Groceries boost: Bukalapak has entered into a joint venture with Trans Retail Group that aims to sell groceries as part of Bukalapak's e-commerce offering in Indonesia's tier 2 regions. We think this could boost its marketplace business.

Income Statement (IDR mn)

Balance sheet (IDR mn)

Cash Flow Statement (IDR mn)