PT VKTR Teknologi Mobilitas (VKTR), a pioneer of EV buses in Indonesia is the sole brand holder (ATPM) of BYD. VKTR has sold 30 EV buses to TransJakarta (the entire TransJakarta’s EV fleet) in 2022 and is expected to supply more than 100 EV buses this year. VKTR will begin 2W EVs sales under the VKTR brand in mid-23. Going forward, we project VKTR's FY23F revenue and net profit to respectively jump +75.9% YoY and +79.4% YoY, supported by the acquisition of PT Bakrie Autoparts and better EV sales. We initiate our coverage on VKTR with BUY and a TP of IDR 140/share based on a SOTP valuation, implying an P/E FY23 of 67.8x and P/E FY26F of 16.4x.

First Mover Advantage in EV Buses. A part of the Bakrie & Brothers Group, VKTR mainly engages in the trading & manufacturing of EVs and other automotive components. As the sole brand holder (APM) of BYD (one of the world’s largest EV manufacturers), VKTR has sold more than 50 electric buses to Transjakarta since 2022, and the figure is expected to exceed 100 units by the end of 2023. Not only electric buses, but VKTR will also sell 2W EVs under the VKTR brand, with V type as the first model, to take advantage of the government’s supports on EV transition. Next year, VKTR will also introduce retrofit products (ICE-to-EV conversion), both buses and 2W, in collaboration with Equipmake.

Growth From EV Facilities Development. VKTR plans to use part of its Capex to build EV industrial facilities, both for buses (through a partnership with CV Tri Sakti in Magelang; both will build a bodywork factory to increase their products’ local component level (TKDN) to comply with government regulations) and 2W (VKTR to collaborate with PT Goodrich Zhong Xing and PT Gaya Abadi Sempurna to launch three new 2W EV models [K, T, and R]). Aside from buses and 2W EVs, VKTR will also expand its business to battery module and pack manufacturing in partnership with Zhejiang GBS Energy Co., Ltd (a Chinese lithium battery integration system manufacturer with more than 15 years of experience in the industry). In addition, we believe that the potential debt repayments will improve VKTR’s balance sheet and turn VKTR into a net cash company in FY23F. We then project VKTR to book a revenue of IDR 1.8 trillion in FY23F (+76% YoY) and an EBITDA of IDR 202 billion (+65% YoY), implying an EBITDA margin of 11%. We also project VKTR to book a bottom line of IDR 89 billion, reflecting an EPS growth of +79% YoY.

Initiate BUY with TP IDR 140/share (SOTP-based). We initiate VKTR with a BUY rating and a TP of IDR 140/share (SOTP-based) implying a P/E FY23F of 67.8x and P/E FY26F of 16.4x. We put FY26F as our projection PE, since we believe its peak performance will be reflected in said year. Main Risks include lower than expected bus & truck sales and tightening competition in electric bus & truck market.