Brokers’ take: Maybank positive on Telkom, initiates ‘buy’ with 5,500 rupiah target

MAYBANK Securities has initiated coverage on one of Indonesia’s largest telco operator Telkom Indonesia with a “buy” call and target price of 5,500 rupiah, optimistic on the company’s growth as a “market leader”, said the brokerage on Tuesday (Aug 30).

Noting Telkom’s 67 per cent revenue share in FY21, analyst Etta Putra forecast the company’s revenue to show a 5.4 per cent compound annual growth rate (CAGR) over FY21 to FY24, up to 167.5 trillion rupiah (S$15.8 billion).

The analyst further expects the group’s mobile data and IndiHome segments to see an 11 per cent and a 9 per cent CAGR to 87.2 trillion rupiah and 33.7 trillion rupiah respectively, between financial years 2021 and 2024.

Given its extensive network and ability to adjust products with ease in a price-sensitive market, Telkom is likely to reap advantages as it retains its market leader position, said Putra, who believes the company is currently trading at a 22 per cent discount to the 7.3 times regional enterprise value to earnings before interest, taxes, depreciation and amortisation (EV/Ebita).

Maybank also likes the telco company for its consistent profitability, low gearing of 0.03 times with an estimated 3.5 per cent dividend yield in FY23.

Additionally, the group’s expansion into a new economy will also help investors reap value from a broader market exposure, said the Maybank analyst.

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Risks for the dual-listed Indonesian company, however, include steeper data price war and economic recession.