GOTO - A groundbreaking deal

KBVS Update
Tuesday, 12 December 2023

GOTO: A groundbreaking deal
(Maintain BUY; TP: IDR97)

Market reacted negatively on the deal formalization, which we deem to be understandable. On top of profit taking, Tokopedia’s value of acquisition is perceived to be undervalued at c. 0.12x GMV.

GOTO- TikTok Shop have formally announced combination of their e-commerce with the transaction valued at USD1.5bn, allowing TikTok Shop Indonesia to be controlling stakeholder of Tokopedia with 75.01% stake.

We think that the groundbreaking deal could overall be positive for GOTO, especially for profitability standpoint, as it will divert Tokopedia funding to TikTok, thus lowering risks, in addition to e-commerce’s slim take rate, indicating low monetization amidst stiff competition.

The acquisition is expected to allow GOTO to re-deploy its resources for on-demand services, and fintech segment, while tapping into broader market segments as well as potential synergy of Tiktok-GOTO ecosystems.

The collaboration may trigger intensifying competition in the industry at least for short to medium term, putting TikTok-Tokopedia being head-to-head with Shopee.

Regards,
Devi Harjoto -KBVS Research