Tower Bersama Infrastructure (TBIG IJ) (Neutral) - Cut FY25F earnings by ~13.6%

Cut FY25F earnings by ~13.6%

Downgrade to Neutral, with reduced TP of IDR2,175 (from IDR2,300)

We turn conservative in our estimates; downgrade to Neutral

We remain positive on the tower sector’s long-term outlook (given rising data traffic). However, in the near term, we view the sector’s competitive dynamics as less favorable compared to the telecom sector, which could benefit from healthier pricing dynamics. Hence, we adopt a conservative stance in our earnings estimates for TBIG, reducing our FY25F earnings estimates by ~13.6% and introducing FY26F and FY27F estimates. We downgrade our rating to Neutral (from Buy) and cut TP to IDR2,175.

Limited catalysts in FY25F

We believe there are limited catalysts for the tower sector in FY25F. In particular, we anticipate a delay in growth of organic tenancy in 2025F due to a potential spectrum auction for the 700MHz band. This suggests that operators that win the auction are less likely to increase their tower tenancies. The 700MHz band has a lower frequency, which implies that it can cover wide areas with fewer base stations and can penetrate more number of buildings effectively. This makes the 700MHz ideal for both urban and rural areas. Hence, we believe that a recovery in organic tenancy is likely to be pushed to the end of FY25F/early FY26F, as operators fully utilize their spectrum holdings.

Valuation and risks

We derive our new TP of IDR2,175 based on the DCF model, assuming a risk-free rate of 6.2%, cost of debt (after tax) of 5.3%, cost of equity of 14.4%, equity risk premium of 7.4%, WACC of 7.9% (8.2% previously), a terminal growth rate of 2.5%, and beta of 1.1x. At our TP, the stock would trade at FY25F EV/EBITDA of 13.9x (compared to 13.5x at the current price). We cut FY25F EPS due to lower earnings projections, as we do not see any catalysts for the sector. Our TP implies 12.4% upside; given the limited upside potential from current levels, we downgrade our rating to Neutral. Upside risks include surging demand for mobile data, entry of new tenants, favorable regulatory changes, inflation-linked lease escalations, and opportunities from M&As or geographical expansion. Downside risks include adverse macroeconomic developments, irrational competition leading to lower rental rates, lower-than-expected tower renewals, slower organic growth, higher opex trends and/or co-location, and/or difficulties in securing new sites to accommodate telecom operators' network expansions.

Year-end 31 Dec	FY24		FY25F		FY26F		FY27F
Currency (IDR)	Actual	Old	New	Old	New	Old	New
Revenue (bn)	6,867	6,988	6,956	0	7,196	0	7,250
Reported net profit (bn)	1,362	1,646	1,422	0	1,680	0	1,715
Normalised net profit (bn)	1,362	1,646	1,422	0	1,680	0	1,715
FD normalised EPS	60.10	72.65	62.74		74.15		75.68
FD norm. EPS growth (%)	-12.7	7.1	4.4		18.2		2.1
FD normalised P/E (x)	32.2	–	30.8	–	26.1	–	25.6
EV/EBITDA (x)	13.3	–	13.5	–	13.1	–	13.1
Price/book (x)	4.4	–	4.2	–	3.9	–	3.7
Dividend yield (%)	2.7	–	2.3	–	1.9	–	2.3
ROE (%)	12.5	13.7	13.9		15.5		14.8
Net debt/equity (%)	305.0	260.5	301.7		284.3		271.0

Source: Company data, Verdhana estimates

Key data on Tower Bersama Infrastructure

Income statement (IDRbn)
Year-end 31 Dec	FY23	FY24	FY25F	FY26F	FY27F
Revenue	6,641	6,867	6,956	7,196	7,250
Cost of goods sold	-1,902	-1,941	-1,946	-1,963	-1,966
Gross profit	4,738	4,926	5,009	5,233	5,283
SG&A	-504	-607	-696	-719	-727
Employee share expense	0	0	0	0	0
Operating profit	4,234	4,319	4,313	4,514	4,557
EBITDA	5,728	5,869	5,864	6,066	6,112
Depreciation	-1,494	-1,551	-1,551	-1,553	-1,555
Amortisation	0	0	0	0	0
EBIT	4,234	4,319	4,313	4,514	4,557
Net interest expense	-1,832	-2,017	-2,199	-2,115	-2,120
Associates & JCEs	0	0	0	0	0
Other income	-598	-825	-550	-550	-550
Earnings before tax	1,805	1,477	1,564	1,848	1,886
Income tax	-183	-54	-78	-92	-94
Net profit after tax	1,622	1,423	1,486	1,756	1,792
Minorities	-61	-61	-64	-76	-77
Other items	0	0	0	0	0
Preferred dividends	0	0	0	0	0
Normalised NPAT	1,560	1,362	1,422	1,680	1,715
Extraordinary items	0	0	0	0	0
Reported NPAT	1,560	1,362	1,422	1,680	1,715
Dividends	-1,316	-1,170	-1,021	-853	-1,008
Transfer to reserves	245	191	400	827	707
Valuations and ratios
Reported P/E (x)	28.1	32.2	30.8	26.1	25.6
Normalised P/E (x)	28.1	32.2	30.8	26.1	25.6
FD normalised P/E (x)	28.1	32.2	30.8	26.1	25.6
Dividend yield (%)	3.0	2.7	2.3	1.9	2.3
Price/cashflow (x)	7.8	6.2	8.4	7.9	7.3
Price/book (x)	3.7	4.4	4.2	3.9	3.7
EV/EBITDA (x)	13.0	13.3	13.5	13.1	13.1
EV/EBIT (x)	17.6	18.0	18.3	17.7	17.6
Gross margin (%)	71.4	71.7	72.0	72.7	72.9
EBITDA margin (%)	86.3	85.5	84.3	84.3	84.3
EBIT margin (%)	63.8	62.9	62.0	62.7	62.9
Net margin (%)	23.5	19.8	20.4	23.3	23.7
Effective tax rate (%)	10.1	3.6	5.0	5.0	5.0
Dividend payout (%)	84.3	85.9	71.8	50.8	58.8
ROE (%)	14.0	12.5	13.9	15.5	14.8
ROA (pretax %)	9.6	9.4	9.4	9.7	9.5
Growth (%)
Revenue	1.8	3.4	1.3	3.5	0.8
EBITDA	1.2	2.5	-0.1	3.5	0.8
Normalised EPS	-4.7	-12.7	4.4	18.2	2.1
Normalised FDEPS	-4.7	-12.7	4.4	18.2	2.1
Source: Company data, Verdhana estimates

Cashflow statement (IDRbn)
Year-end 31 Dec	FY23	FY24	FY25F	FY26F	FY27F
EBITDA	5,728	5,869	5,864	6,066	6,112
Change in working capital	40	1,252	-545	-450	-7
Other operating cashflow	-178	-54	-78	-92	-94
CF from operations	5,590	7,068	5,241	5,524	6,011
Capital expenditure	-3,217	1,458	-872	-1,085	-1,279
Free cashflow	2,374	8,526	4,369	4,439	4,732
Reduction in investments		470	0	0	0
Net acquisitions	0	0	0	0	0
Dec in other LT assets		-1,074	0	0	0
Inc in other LT liabilities		-1	0	0	0
Adjustments	0	0	0	0	0
CF after investing acts	2,374	7,921	4,369	4,439	4,732
Cash dividends	-1,316	-1,170	-1,021	-853	-1,008
Equity issue	923	-2,189	0	0	0
Debt issue	0	0	0	0	0
Convertible debt issue	0	0	0	0	0
Others	-2,146	-3,881	-3,465	-4,135	-4,140
CF from financial acts	-2,539	-7,240	-4,486	-4,988	-5,148
Net cashflow	-166	681	-117	-549	-416
Beginning cash	966	801	1,482	1,364	815
Ending cash	801	1,482	1,365	815	399
Ending net debt	29,214	30,492	31,363	31,912	32,328
Balance sheet (IDRbn)
As at 31 Dec	FY23	FY24	FY25F	FY26F	FY27F
Cash & equivalents	801	1,482	1,364	815	399
Marketable securities	0	0	0	0	0
Accounts receivable	1,958	1,984	457	877	884
Inventories	539	244	244	244	244
Other current assets	1,959	1,165	1,668	1,785	1,804
Total current assets	5,258	4,874	3,733	3,721	3,330
LT investments	470	0	0	0	0
Fixed assets	35,923	36,002	36,793	37,795	38,988
Goodwill	390	440	440	440	440
Other intangible assets	0	0	0	0	0
Other LT assets	4,926	6,000	6,000	6,000	6,000
Total assets	46,966	47,316	46,966	47,957	48,759
Short-term debt	10,874	18,730	1,323	3,139	2,958
Accounts payable	197	146	146	148	148
Other current liabilities	4,187	4,425	2,856	2,943	2,962
Total current liabilities	15,258	23,301	4,326	6,230	6,067
Long-term debt	19,140	13,244	31,404	29,588	29,769
Convertible debt	0	0	0	0	0
Other LT liabilities	108	108	108	108	108
Total liabilities	34,506	36,652	35,838	35,925	35,944
Minority interest	647	668	732	808	885
Preferred stock	0	0	0	0	0
Common stock	2,021	1,510	1,510	1,510	1,510
Retained earnings	5,045	5,417	5,817	6,644	7,351
Proposed dividends	0	0	0	0	0
Other equity and reserves	4,748	3,070	3,070	3,070	3,070
Total shareholders' equity	11,813	9,997	10,397	11,224	11,931
Total equity & liabilities	46,966	47,317	46,967	47,957	48,760
Liquidity (x)
Current ratio	0.34	0.21	0.86	0.60	0.55
Interest cover	2.3	2.1	2.0	2.1	2.1
Leverage
Net debt/EBITDA (x)	5.10	5.20	5.35	5.26	5.29
Net debt/equity (%)	247.30	305.02	301.65	284.32	270.96
Per share
Reported EPS (IDR)	68.87	60.10	62.74	74.15	75.68
Norm EPS (IDR)	68.87	60.10	62.74	74.15	75.68
FD norm EPS (IDR)	68.87	60.10	62.74	74.15	75.68
BVPS (IDR)	521.39	441.22	458.89	495.39	526.58
DPS (IDR)	58.07	51.65	45.07	37.65	44.49
Activity (days)
Days receivable	62.3	105.0	64.0	33.8	44.3
Days inventory	111.4	73.8	45.7	45.3	45.2
Days payable	46.1	32.3	27.4	27.3	27.4
Cash cycle	127.6	146.5	82.3	51.8	62.1
Source: Company data, Verdhana estimates

Company profilePT Tower Bersama Infrastructure Tbk is an Indonesia-based company engaged in provisioning telecommunication infrastructure solution and services. The principal business of the Company and its subsidiaries is leasing space for antennas and other equipment for wireless signal transmission at tower sites and shelter-only sites under long-term lease agreements with telecommunication operators. It also provides telecommunication operators with access to its Distributed Antenna System (DAS) networks in shopping malls and office buildings in major urban areas. Its telecommunication sites, which are comprised of telecommunication towers, shelter-only sites and DAS networks, are primarily located in Java Island and Bali Island, Indonesia. Some of its subsidiaries are PT Telenet Internusa, PT United Towerindo, PT Tower Bersama, PT Tower One, PT Triaka Bersama, PT Metric Solusi Integrasi, PT Solusi Menara Indonesia, TBG Global Pte Ltd and PT Menara Bersama Terpadu.

Valuation MethodologyWe derive our TP of IDR2,175 based on a DCF-based model, assuming a risk-free rate of 6.2%, cost of debt (after tax) of 5.3%, cost of equity of 14.4%, equity risk premium of 7.4%, WACC of 7.9%, a terminal growth rate of 2.5%, and beta of 1.1x. The benchmark index for this stock is JCI.

Risks that may impede the achievement of the target priceRisks for TBIG include i) adverse macro trend (ii) lower renewal lease rates (iii) slower colo orders and iv) difficulties in securing new sites

ESGPT Tower Bersama Infrastructure Tbk is a provider of coverage solutions. The firm's primary business is leasing space for antennas and other equipment for wireless signal transmission to telecommunication operators. PT Tower Bersama's other services include network planning, land acquisition and site licensing, infrastructure design and construction, network installation and project management, network expansion rollouts, and ongoing servicing. A majority of the firm's revenue is generated in Indonesia.

Fig. 1: TBIG—P&L

TBIG P&L IDRmn	4Q23	3Q24	4Q24	q-q %	y-y %	YTD 2024	YTD 2023	y-y %
Revenue	1,687,808	1,712,574	1,740,549	1.6	3.1	6,867,399	6,640,645	3.4
				#DIV/0!	#DIV/0!	0	0	#####
Cost of Revenues	532,094	498,764	493,679	(1.0)	(7.2)	1,941,212	1,902,397	2.0
Gross profit	1,155,714	1,213,810	1,246,870	2.7	7.9	4,926,187	4,738,248	4.0
Margin	68.5%	70.9%	71.6%			71.7%	71.4%
Operating Income	1,028,650	1,066,995	1,077,408	1.0	4.7	4,318,756	4,234,072	2.0
Margin	60.9%	62.3%	61.9%			62.9%	63.8%
				#DIV/0!	#DIV/0!	0	0
EBITDA	1,441,446	1,466,525	1,465,934	(0.0)	1.7	5,869,273	5,727,650	2.5
Margin	85.4%	85.6%	84.2%			85.5%	86.3%
						0	0
NP	449,546	436,586	194,240	(55.5)	(56.8)	1,361,624	1,567,936	(13.2)
Operational Data	4Q23	3Q24	4Q24	q-q %	y-y %	YTD 2024	YTD 2023	y-y %
Tenants	41,227	42,546	42,722	0.4	3.6	42,722	41,227	3.6
- Tower tenants	41,109	42,430	42,608	0.4	3.6	42,608	41,109	34.9
- Colocation ratio	1.84	1.80	1.79			1.88	1.88
Sites	22,475	23,681	23,892	0.9	6.3	23,892	22,475	47.3
Tower sites	22,357	23,565	23,778	0.9	6.4	23,778	22,357	47.8
Ave leasing IDRmn/mth	13.6	13.4	13.6	1.2	(0.5)

Rev by operators IDRmn	4Q23	3Q24	4Q24	q-q %	y-y %	YTD 2024	YTD 2023	y-y %
Tsel	545,097	580,080	595,215	2.6	9.2	595,215	545,097	9.2
ISAT	458,251	430,338	456,248	6.0	(0.4)	456,248	458,251	(0.4)
EXCL	312,547	318,255	306,075	(3.8)	(2.1)	306,075	312,547	(2.1)
Others	371,913	383,901	383,011	(0.2)	3.0	383,011	371,913	3.0
Total	1,687,808	1,712,574	1,740,549	1.6	3.1	1,740,549	1,687,808	3.1
Rev by operators %	4Q23	3Q24	4Q24			YTD 2024	YTD 2023
Tsel	32.3	33.9	34.2			34.2	32.3
ISAT	27.2	25.1	26.2			26.2	27.2
EXCL	18.5	18.6	17.6			17.6	18.5
Others	22.0	22.4	22.0			22.0	22.0
Total	100.0	100.0	100.0			100.0	100.0

Source: Company data, Verdhana research

Fig. 2: TBIG—earnings changes

Source: Company data, Verdhana estimates

Fig. 3: TBIG—valuation

Source: Company data, Verdhana estimates

INVESTMENT RATINGS
A rating of ‘Buy’, indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of ‘Neutral’, indicates that the analyst expects the stock to perform in line with the Benchmark over the next 12 months. A rating of ‘Reduce’, indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of ‘Suspended’, indicates that the rating, target price, and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as ‘Not Rated’ or ‘No Rating’ are not in regular research coverage. Benchmark is Indonesia Composite Index (‘IDX Composite’). A ‘Target Price’, if discussed, indicates the analyst’s forecast for the share price with a 12-month time horizon, reflecting in part of the analyst’s estimates for the company’s earnings, and may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market in general.

GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by PT Verdhana Sekuritas Indonesia (“PTVSI”) a securities company registered in Indonesia, supervised by Indonesia Financial Services Authority (OJK) and a member of the Indonesia Stock Exchange (IDX).

This report is intended for client of PTVSI only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of PTVSI.

The research set out in this report is based on information obtained from sources believed to be reliable, but PTVSI do not make any representation or warranty as to its accuracy, completeness or correctness. The information in this report is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company (or companies) referred to in this report. Any information, valuations, opinions, estimates, forecasts, ratings or targets herein constitutes a judgment as of the date of this report is published, and there is no assurance that future results or events will be consistent.

This report is not to be construed as an offer or a solicitation of an offer to buy or sell any securities or financial products. PTVSI and its associates, its directors, and/or its employees may from time to time have interests in the securities mentioned in this report or it may or will engage in any securities transaction or other capital market services for the company (companies) mentioned herein.

ANALYST CERTIFICATION
The research analyst primarily responsible for the content of this report and certifies that the views about the companies including their securities expressed in this report accurately reflect his/her personal views. The analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.

RESTRICTIONS ON DISTRIBUTION

By accepting this report, the recipient hereof represents and warrants that you are entitled to receive such report in accordance with the restrictions and agrees to be bound by the limitations contained herein. Neither this report nor any copy hereof may be distributed except in compliance with applicable Indonesian capital market laws and regulations.

Rating Table

Rating Down from Buy	Neutral
Target price Reduced from IDR 2,300	IDR 2,175
Closing price 11 April 2025	IDR 1,935
Implied upside	+12.4%
Market Cap (USD mn)	2,611.2
ADT (USD mn)	0.1

Relative performance chart

Source: LSEG, Verdhana

M cap (USDmn)	2,611.2
Free float (%)	39.5
3-mth ADT (USDmn)	0.1

(%)	1M	3M	12M
Absolute (IDR)	-11.2	-4.7	3.5
Absolute (USD)	-13.3	-8.1	-2.4
Rel to Jakarta Stock Exchange Composite Index	-6.9	7.0	17.5

Research Analysts

Erwin Wijaya (erwin.wijaya@verdhana.id)

Tags: TELECOMS, TBIG, TBIG JK, TBIG IJ, Erwin Wijaya

Tower Bersama Infrastructure (TBIG IJ) (Neutral) - Cut FY25F earnings by ~13.6%

Cut FY25F earnings by ~13.6%

Key data on Tower Bersama Infrastructure

Fig. 1: TBIG—P&L

Fig. 2: TBIG—earnings changes

Fig. 3: TBIG—valuation

Rating Table

Relative performance chart

Research Analysts

yudi Administrator

Tower Bersama Infrastructure

Indonesia towers - Back to growth path

XL Axiata EXCL IJ -Buy - Solid 1H24 operating results

XL Axiata EXCL IJ - Buy - Escaping the decade of doldrums

XL Axiata EXCL IJ -Buy- Clearer merger path

XL Axiata - EXCL IJ - Buy - FTTH a revenue driver

Tower Bersama Infrastructure (TBIG IJ) (Neutral) - Cut FY25F earnings by ~13.6%

Fig. 1: TBIG—P&L

Fig. 2: TBIG—earnings changes

Fig. 3: TBIG—valuation

Related Books

Password

Embed Code

Report Issue

Site Languages