Equity Analysis /

Bukalapak: Cashflow positivity on the horizon

  • We raise our target price and earning forecasts on the back of widening take rate and TPV

  • We expect Bukalapak to be cashflow positive by FY23

  • Bukalapak has enough ammunition to finance its cash burn for 12 years

Bukalapak: Cashflow positivity on the horizon
Nirgunan Tiruchelvam
Nirgunan Tiruchelvam

Head of Consumers Equity Research

Tellimer Research
16 August 2022
Published byTellimer Research

We revise our earnings forecasts and raise our target price for Bukalapak by 5%. Our new target price of IDR481 suggests 44% upside from the current share price. We reiterate our Buy recommendation.

Earnings revision table (IDR mn)

FCFF Valuation

Result Summary

Three factors to note:

  1. Bukalapak's Mitra take rate has risen from 1.0% to 2.8% between Q2 21 and Q2 22. This increase can be ascribed to the traction that Bukalapak is generating from Indonesia's vast network of warungs (corner shops). Bukalapak has succeeded in not only connecting the Warungs to the e-commerce network, but has also provided bookkeeping and CRM tools. We are bullish on Bukalapak's ability to raise take rates further in this segment.

  2. Bukalapak's Marketplace take rate is also on the ascendancy. It rose from 1.8% to 2.1% between Q2 21 and Q2 22. The commission fee charged by the marketplace is widening as e-commerce is gathering momentum in Indonesia's hinterland. Bukalapak's marketplace business targets Indonesia's Tier 2 and Tier 3 cities.

  3. 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$22mn in the forecast period, which would fund a cash burn of 10+ years.

Comparables: Baby Amazons

Baby Amazon: Cash Runway (Months)

Bukalapak: Income Statement (IDR mn)

Bukalapak: Balance sheet (IDR mn)

Bukalapak: Cash Flow Statement (IDR mn)