Blibli Performance Surgery Before Official IPO

Blibli (PT Global Digital Niaga Tbk) is the next technology startup to hold an IPO in Indonesia. Currently, the initial bidding process has started to open until October 24, 2022, before being officially listed on the IDX on November 7, 2022 with the ticker "BUY".

Based on the prospectus, Blibli will issued 17,77 billion shares, equivalent to 15% of the company's issued and paid-up capital. The offering price for each share is Rp410-Rp460. From this implementation, Blibli has the potential to raise fresh funds of Rp. 7,28 trillion to Rp. 8,17 trillion.

Most of the proceeds from the IPO will be used to pay off the company's debts, as much as Rp. Then the rest is used by the company and its subsidiaries as working capital to support main business activities and development.

At the same time, the company also implemented the Management and Employee Stock Option Plan (MESOP) program by allocating 3,6 billion shares. This amount is equivalent to 2,99% shares of the issued and paid-up capital owned by the company.

With the implementation of the IPO, the composition of Blibli's shareholding will change. PT Global Investama Andalan became 83,8%, the community 15%, and the remaining 1,2% will be owned by individuals, consisting of Kusumo Martanto, Honky Harjo, Lisa Widodo, Hendry, and Andy Utomo.

Financial performance

Blibli's equity after IPO taking into account the program ESA (Employee Stock Allocation) and MESOP, will reach IDR 30,5 trillion or approximately $2 billion. For comparison, the current market capitalization of BUKA is IDR 25 trillion ($1,6 billion), while GOTO is at IDR 244 trillion ($15 billion).

The technology sector is one of the most affected sectors globally so far this year, along with the weakening economy. Indonesia Stock Exchange itself, as benchmarking, delivering a positive 3,5% performance from the beginning of the year.

Based on the company's financial statements, as of June 30, 2022, Blibli has assets worth Rp. 16,8 trillion, consisting of current assets of Rp. 5,38 trillion and non-current assets of Rp. 11,48 trillion. The figure fell 18,7% on a year-to-date from IDR 18,3 trillion in 2021.

Next, it recorded a net income of Rp6,7, up around 123% on a year-on-year from the previous Rp. 2,9 trillion. Even so, Blibli still suffered a loss for the current period of IDR 2,5 trillion, up 123,5% from the previous period of IDR 1,11 trillion. This condition reflected the growth in EBITDA loss which increased by 65,3% from Rp1,3 trillion to Rp2,29 trillion.

The company also presented other performance indicators based on Total Processing Value (TPV), Gross Profit Before Discount (GPBD), Yearly Transacting Users (YTU), Take Rate, Monthly Active Consumers (MAU), and Average Order Value (AOV).

Blibli's largest business contributor, based on TPV, came from the 3P Retail business of IDR 5,6 trillion as of March 2022. Then followed by the 1P Retail of IDR 2,12 trillion, Institutions of IDR 1,36 trillion, and Physical Stores of IDR 937 billion. In total, the TPV that was successfully printed was IDR 10 trillion, an increase of 94,5% on a year-on-year from the previous Rp5,14 trillion.

But based on the Take Rate, the contribution of the Physical Store is greater at 19,8%. Meanwhile, from 1P Retail only 5%, 3P Retail 4%, and Institutions 1%. In the prospectus, the company believes that the 1P Retail segment can increase the company's long-term Take Rate. Meanwhile, for the near and medium term, the addition of the Physical Store segment in 2021 has provided additional TPV for companies that benefit from a strong Take Rate.

Take Rate can be interpreted as a commission taken by the company from the transaction value. That is, the higher the Take Rate percentage, the better for the company because it is more sustainable.

By definition, 1P Retail offers a range of first party products and services (“1P”) that are purchased wholesale and sold at retail to consumers. If, 3P oversees independent third parties (“3P”) who sell products and services offered directly to consumers (the “3P Retail” segment), either through Blibli or tiket.com.

As for the total MAU, the company recorded an increase from 32,5 million users to 45,7 million users. Meanwhile, the combined AOV increased from Rp622.603 ​​to Rp842.845. The Company conveyed that the increase in AOV and MAU was due to the increasing demand for lifestyle and travel products in line with the gradual lifting of restrictions related to the pandemic, as well as increased marketing activities.

Prospect BUY

In its outlook, the company expects costs and expenses to continue to increase in absolute terms but lower in terms of percentage to TPV in line with business growth and its efforts to attract more customers in the consumer and institutional groups to the Company's platform.

We believe that the company's business model, including order fulfillment infrastructure that concentrates on densely populated urban areas, gives the company a significant operational advantage and enables it to realize structural cost savings.

"Along with the growth of its business scale, the company believes that through the increase in scale, plus the impact of its network, the company will be able to benefit from the substantially increasing economies of scale."

However, the company admits that the recorded loss was caused by investments in the company's activities related to the company. However, the company will still take action and make investments that do not produce optimal short-term financial performance.

"And even cause an increase in operating losses in the short term, without any guarantee that the company will eventually achieve the expected long-term profitability or benefits."

In terms of the target market, both Blibli, tickets, and Ranch Market, targeting large interconnected markets. According to Frost & Sullivan, in the segment e-commerce, has a Total Addressable Market (TAM) of $150 billion in 2025 with a CAGR of 19% from 2020 to 2025. As for OTA, the TAM is $41 billion with a CAGR of 28%. Lastly, the grocery segment with a TAM of $245 billion with a CAGR of 6%.

“The company serves a combined TAM of $255 billion in 2020, which is projected to grow at a CAGR of 11% to $436 billion by 2025 collectively based on Frost & Sullivan and Euromonitor.”