BELI - Better 2Q23 performance

BELI showed an improvement in financial metrics amid strong TPV growth in 2Q23, with EBITDA to TPV reaching -4.4% in 1H23 (VS our estimate of -4.7%), although 1H23 TPV and blended take rate of 4.8% (VS KBVS' FY '23 of 5.2%) were slightly behind ours at 47.0%. Reiterate BUY Enjoying higher TPV growth BELI's 2Q23 TPV grew 5.3% qoq to IDR18.9 tn, bringing 1H23 TPV to IDR36.8 tn, yet slightly behind our estimate of 47%. This was largely supported by significant improvement in institution TPV that jumped 186.2% qoq in line with number of institutional clients addition +226% qoq in 2Q23. Meanwhile, TPV of 1P and 3P segments declined 12.5% qoq and 6.2% qoq, respectively on the back of rationalization of product categories, according to management. Nevertheless, BELI's take rate inched down by 8.6bps qoq to 4.78% in 2Q23, impacted by lower institution and 1P retail, yet it was slightly compensated by 3P segment that increased significantly qoq by 40.9bps thanks to adjustment take rate for 3P sellers in Mar ’23. Seeing an improvement in financial metrics BELI delivered better monetization efforts as discount and promotion to TPV lowered qoq and yoy from 1.6%/2.4% in 1Q23/2Q22 to 1.5% in 2Q23. This brought the company's revenue to surge 3.0%/11.4% qoq/yoy in 2Q23. BELI's continued cost discipline was also reflected by lower operating expenses by 0.5% qoq, resulting opex to TPV to decline 50bps qoq to 4.4% (VS 4.90%/9.76% in 1Q23/2Q22). This also caused BELI's EBITDA loss to TPV at 4.2%/4.4% IN 2Q23/1H23. Pushing for greater synergy through cross-pollinated program To further improve AOV and users, BELI has rolled out an integrated and unified loyalty program, Blibli Tiket rewards, allowing customers to benefit from cross-selling program. The program is extended to reach its supermarket network, Ranch Market. Furthermore, BELI's move to further expand its corporations and assortments in 3P platforms, Tiket.com that currently includes 107 partner airlines in 220 countries. In addition, the company has added 14 new electronic stores in 2Q23. Amidst slower than expected TPV, we adjust our '23 and '24 gross revenue assumption by - 13.5% and -11.5%, respectively, on expectation of fading high-base effect post-covid traveling, as well as more intense competition with both physical retailers and online. This also resulted in our blended take-rate assumption from 5.2%/5.6% to 4.9%/5.0% in '23/'24. Nevertheless, we lift our EBITDA to TPV '23/'24 from -4.7%/-2.2% to -4.3%/-1.9% in line with improvement in better cost control. Maintain BUY with target price of IDR523 We reiterate our BUY call with slightly lower target price of IDR523 per share (previously: IDR559 per share) on the back of adjustment in our gross revenue forecast. Note that our price target implies 2024F P/TPV at 0.8x and P/gross revenue at 3.4x. While BELI's 1H23 operational metrics were broadly below our previous estimate, partly due to its segment reclassification, we like BELI's efforts to push its monetization that resulted in better than expected financial performance.