GoTo’s GMV growth to decelerate, CLSA slashes TP to 165 rupiah

The analysts' forecasts on contribution margin breakeven and adjusted ebitda breakeven remain unchanged.

CLSA analysts Norman Choong and Aimee Garibaldi have kept their “buy” call on GoTo with a lower target price of 165 rupiah (1.5 cents) from 425 rupiah previously on lower long-term revenue growth rate.

In their Jan 30 report, the analysts present the findings from a survey they conducted to gauge consumer behaviour, following concerns about the deceleration in e-commerce gross transaction value (GTV).

Through the survey, the analyst found that about 46% of the respondents saw a decrease in their online shopping after social restrictions were lifted. Aside from the reopening, the decrease may also be contributed by higher inflation and hike in fuel price, which eventually hampers purchasing power.

The analysts also highlight increased competition in the e-commerce space. TikTok Shop is gaining popularity among the consumers, boasting flagship video features which makes it stand out compared to the incumbents.

Despite this, years of relationship building and brand reputation have given Tokopedia a lasting edge, the analysts say. About 85% of respondents say Tokopedia remains their long-standing choice on the back of better shopping experience, product availability and national pride.

From the survey and preliminary data, the analysts found that GoTo’s gross merchandise value (GMV) would decelerate this year. They note that management had also guided for a deceleration in GTV, although it is not an overall decline.

GoTo had also guided for its gross and net take rates to improve faster compared to the analysts’ 2022 estimate, which imply a similar revenue growth rate to last year. Meanwhile, the on-demand segment is seeing better traction compared to e-commerce as the market becomes a duopoly.

Gojek and Grab in the on-demand services segment and Tokopedia and Shopee in the e-commerce segment are raising their take rate in unison. TikTok is emerging as a strong player with a low take rate, although its GTV share is still relatively small, the analysts say.

GoTo has reduced its headcounts by 14% in 4QFY2022, not ruling out further cost cutting measures to help it reach a profitable trajectory. While Bank Jago remains core for GoTo’s financials, its list of other investments at an estimated US$400 million are up for sale, should its management deems it necessary.

As of the first nine months of 2022, the total disclosed value for its logistics unit Sicepat was at US$200 million, while the combined value for its stake in publicly disclosed companies were at 3.8 trillion rupiah (US$258 million). This includes a 10% stake divested in retailer Alfamart worth US$100 million during 4QFY2022.

While the analysts have lowered their headline ebitda and NPAT forecasts for 2023 and 2024 after incorporating non-cash share compensation, their forecasts on contribution margin breakeven and adjusted ebitda breakeven remain unchanged.

As at 11.39am Singapore time, shares in GoTo are trading 3 rupiah lower or 2.42% down at 121 rupiah. 

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