Blue Bird (BIRD) – BUY (Initiation)
Price: IDR 1,430 – Target Price: IDR 2,000
Time to Step on the Gas!
We initiate our coverage on BIRD with a BUY recommendation and a DCF-based TP of IDR 2,000 (with the following assumptions: WACC: 10.4%, terminal growth: 2.5%), implying FY23F PE and EV/EBITDA of 11.4x and 7.4x respectively. Considering its position as the market leader in the Indonesian taxi services industry and the ample room for growth for the industry itself (mainly due to low penetration), we believe that BIRD still has massive upside potential.
Taxi services industry’s potential. The downward trend in Covid-19 cases in Indonesia and the return of mobility have provided positive sentiment for the transportation industry, including taxi services. BIRD, as the market leader in the Indonesian taxi services industry, has shown solid recovery from the impact of the pandemic, with total taxi utilization rates of 57.2% (+1,000bps YoY) in FY21 and 76.6% in FY22. Aside from utilization rate, the company’s ARPV went up considerably in FY22, reaching IDR 650 thousand (+35.0% YoY) for regular taxis and IDR 1.4 million (+50.0% YoY) for executive taxis. We project a +10% growth in the ARPV of both segments each year, with utilization rates of approx. 80%, exceeding the pre-Covid level of 70%.
Solid financial structure. We project BIRD’s taxi fleet to grow to 14,685 regular taxis (+6.5%) and 481 executive taxis (+2.5%) in FY23F. Assuming ARPV growth of +10% YoY and a utilization rate of 80%, BIRD’s FY23F revenue is estimated to reach IDR 3.9 trillion (+18.5% YoY) with a GPM of 31.4% and net profit of IDR 451 billion. Regarding debt ratio, we project BIRD’s DAR and DER at 0.20x and 0.27x for FY23F and 0.19x and 0.27x for FY24F, with net gearing of 0.13x for FY23F and 0.15x for FY24F.
BUY, TP IDR 2,000 (8.0x FY23F PE). Considering the downward trend of Covid-19 cases and the return of mobility, we believe there’s massive upside potential for the Indonesian taxi services industry, including for BIRD. Thus, we initiate our coverage on BIRD with a BUY recommendation and a DCF-based TP of IDR 2,000 with the following assumptions: risk-free rate of 7.0%, equity risk premium of 6.0%, beta of 0.6x, and terminal growth of 2.5%. Our calculation gave us an equity value of IDR 5.0 trillion.