Mirae Asset Predicts Technology Issuers Will Be Benefited In 2024, Here's The Reason

Rupiah illustration (photo: dock. intermediate)

JAKARTA - PT Mirae Asset Sekuritas Indonesia is optimistic that the digital financial industry will develop further next year in line with the ability of industry players to cover losses when people's purchasing power is predicted to increase, triggering incessant purchases of goods.

Research Analyst Mirae Asset Sekuritas Indonesia Christopher Rusli, assessed that digital technology issuers in the future will greatly benefit if the prediction of a global interest rate reduction trend will be realized in 2024.

Meanwhile, it is believed that the reduction in interest rates will boost people's purchasing power, thus encouraging the performance of these companies.

"We assess that digital technology and financial companies have the potential to record a positive adjusted EBITDA (adjusted EBITDA) in the next few years if the trend of lower interest rates will be realized by the end of next year", Christopher said in Media Day: December 14, December 2023.

Adjusted EBITDA is profit before interest expense, tax, depreciation, and amortization (EBITDA) is adjusted to exclude calculations from unsustainable (non-recurring) income, unusual, and only one time. Added EBITDA calculations are commonly used to compare several companies whose businesses are diverse but are in the same industry.

He said there are two digital technology companies that are currently being paid attention to by Mirae Asset, namely PT Bukalapak.com Tbk (BUKA) recommendations for Trading Buy, with a target price of IDR 240 and PT GoTo Gojek Tokopedia Tbk (GOTO) recommendations for Hold with a target price of IDR 94.

Christopher said that BUKA will benefit from expansion in the specialty verticals segment and online to offline (O2O) segment through the Mitra Bukalapak program when macroeconomic conditions in Indonesia improve.

In addition, another factor that will support BUKA's performance is the company's adjusted EBITDA position, which previously has the potential to turn positive compared to competitors at the end of 2023.

On the other hand, GOTO is considered to have a brighter performance outlook than before after the purchase of 75 percent of PT Tokopedia's (Tokped) shares by ByteDance which controlled TikTok. He believes the company's adjusted EBITDA performance will be faster positive than previous predictions.

The GOTO outlook is supported by five factors. First, the prediction of the dominance of the e-commerce gross merchandise (GMV) market share after the acquisition of Tokped by TikTok is around 40 percent-50 percent (previously Shopee 36 percent, Tokped 35 percent, and TikTokShop 5 percent).

Second, more flexible finance. Third, profit from live commerce because TikTok users in Indonesia are the second highest in the world.

Fourth, the potential for cross selling of 125 million TikTok users for other GOTO services and products. And fifth, the reduction in GOTO costs because the Tokped load is no longer consolidated to the performance of GoTo Gojek Tokopedia.

Although still recommending the HOLD for GOTO, he said that currently the recommendations are still under review to be changed in line with the news of the acquisition of the majority of Tokopedia shares recently carried out by TikTok.

Therefore, Christopher said he was still monitoring developments from digital financial issuers and related sectors, including the official details of the $1.5 billion acquisition of Tokopedia shares.

On the same occasion, Head of Research Team Mirae Asset Sekuritas Indonesia Robertus Hardy assessed that the digital technology sector will become one of the prospective sectors next year, along with the banking sector, telecommunications, automotive, logistics, and other sectors related to consumption.

"For next year, we predict the fair value of the Composite Stock Price Index (JCI) will be in the range of 8.100 in the second semester, after the relaxation of monetary policy and clarity of the election results for the second round." he said.

Hardy explained that the potential strengthening of the domestic major stock index was supported by several factors, namely the huge potential for easing global central bank monetary policy, which could trigger a positive investment climate, both for the stock market and the bond market.

In addition, Hardy also considered this condition an opportunity to choose an more aggressive investment strategy.