ISAT - 3Q24 results: in-line EBITDA; ARPU declined due to weak seasonality  
Thursday, October 31, 2024       09:48 WIB

 Sector Update  / Telecommunications  /  IJ  /     Click here for full PDF version 
 Author(s):  Jovent Muliadi  ;Ryan Dimitry 
  • 9M24 EBITDA of Rp20.0tr (+28% yoy) met ours/consensus estimates at 73/74% of FY24F vs. 3Y average of 73%.
  • Revenue reached Rp41.8tr (+12% yoy) in 9M24, also in-line.
  • ARPU declined qoq to Rp37.2k due to seasonal factors, but price increase may lift ARPU in 4Q24. Reiterate Buy.

9M24 in-line EBITDA and profit supported by solid topline growth
posted a 9M24 net profit of Rp3.9tr (+39% yoy), in-line with ours/consensus estimates at 76/75%. Revenue rose to Rp41.8tr (+12% yoy), meeting ours/consensus estimates at 73/75%. Meanwhile, EBITDA rose to Rp20tr (+28% yoy) in 9M24, also in-line at 73/74% of ours/consensus on better cost efficiencies and solid topline growth. EBITDA margin grew to 47.8% (+121 bps yoy) as cash cost was only up by +9% yoy (vs. revenue growth of +12% yoy); this was supported by benign O&M and personnel expenses rising +7/8% yoy, but weighed down by higher marketing cost (+40% yoy) as introduced a new incentive program for its distributors.
Revenue growth slowed on a qoq basis due to seasonality
3Q24 net profit came at Rp1.1tr (+30% yoy/-21% qoq), as slowdown on a qoq basis due to seasonality. Its revenue reached Rp13.8tr (+8% yoy/-2% qoq) in 3Q24, as cellular revenue rose +8% yoy/flat qoq and revenue also grew +32% yoy/+2% qoq while fixed telecom declined by -25% yoy/-16% qoq. EBITDA rose to Rp6.6tr (+8% yoy/-5% qoq), implying an EBITDA margin of 47.6% (+4 bps yoy/-120 bps qoq) on weaker revenue seasonality. Cash opex grew by +8% yoy/flat qoq as personnel cost increased 16.5% yoy due to increases in salaries and incentives.
Declining subs and ARPU qoq due to soft consumer demand
Subs declined slightly to 98.7mn in 3Q24 (vs. 100.9mn in 2Q24), likely attributable to weaker seasonality in 3Q along with sim card consolidation on the low-end customers. ARPU declined to Rp37.2k (vs. Rp35.4/38.4k in 3Q24/2Q24) as weaker seasonality affected spending and still short of management's target of Rp40k ARPU . Management expects ARPU to improve in 4Q24 as price hikes of 5-9% will take affect from increases in modern and traditional channels between 3rdweek of Aug to Sep. Data yield was flat at Rp2.7/MB.
Maintain Buy with an unchanged TP of Rp3,500
Overall results came within our expectations, we expect to see further monetization in the 4Q24 as has done a price hike at the end of 3Q. Maintain Buy on with an unchanged blended valuation-based (DCF and EV/EBITDA multiple) TP of Rp3,500. Risk are sluggish synergy realization and competition.


Sumber : IPS
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