GOTO - Profit Inflection Meets Strategic Interest

KBVS Update
Friday, 25 April 2025

GOTO: Profit Inflection Meets Strategic Interest
(BUY; TP: IDR 110)

■ GOTO reported its strongest quarterly performance to date in 4Q24, achieving a major milestone with adjusted EBITDA break-even of IDR399 bn. FinTech was a key earnings driver, reaching positive EBITDA a year ahead of guidance, supported by a +35% yoy rise in users and +18% growth in transaction frequency. The standalone -GoPay app gained momentum_, with loan disbursements growing +172% yoy (over 70% through Bank Jago). On-Demand Services also posted record profitability, with EBITDA of IDR267 bn, driven by ad revenue (+92% yoy) and merchant-funded promos (+190% yoy).

■ Media reports indicate that Grab is in advanced discussions to acquire GOTO at a valuation exceeding USD7 bn (>IDR 100/share), representing a +25% premium to the last closing price (IDR 80 /sh). At this level, GOTO would trade at 6.1x EV/Sales and 68.3x EV/EBITDA 25F, well above peer averages, suggesting Grab’s focus on strategic synergies and regional dominance. A combined entity would command 60–70% market share in Southeast Asia's ODS sector, though potential regulatory scrutiny may arise. Meanwhile, GoPay may benefit from expanded travel sector exposure if a ByteDance–Traveloka partnership materializes.

■ We reinitiate coverage with a BUY rating and target price of IDR110/sh, implying +37.5% upside. Despite ongoing post-IPO overhang, we believe GOTO offers compelling value, backed by solid FY24 results and an improving 25F outlook. FinTech is expected to drive GTV growth at a 10–15% CAGR 25–27F, though its take rate remains low (~1%) versus ~18% for ODS. Revenue is projected to grow +9–14% in 25–27F, backed by cost discipline and rising ad monetization. Our SOTP valuation applies 3.5x EV/Sales to ODS and 6.4x to GoPay, adjusted for market sentiment with a 30% discount.

Regards,
Laurencia Hiemas – KBVS Research