Reflections
GoTo IPO: Will I Invest in The New Company of Gojek and Tokopedia?
6 April 2022
Source: GoTo Image
When Will GoTo IPO?
GoTo will IPO in Indonesia stock exchange on 11 April 2022.
The allocation date for those who have subscribed is tomorrow on 7 April 2022 while the allocation of the shares electronically is on 8 April 2022.
11 April 2022 will be the first day that GoTo will go public in IDX.
You can see GoTo IPO Prospectus here.
Source: GoTo IPO Prospectus
GoTo is combining e-commerce (Tokopedia), on-demand (Gojek) and financial services (Goto financial) to become a strong platform in Southeast Asia.
GoTo ecosystem encompasses around 2% of Indonesia’s GDP and continues to expand, serving Indonesia’s 270 million consumers and other emerging markets across Southeast Asia.
As of 30 September 2021, they have over 14 million merchant partners and 2.5 million drivers.
The Financials of GoTo
Source: GoTo IPO Prospectus
Based on the information in the IPO Prospectus, the largest shareholders of GoTo is Sequoia Capital India at 20.70% followed by Indonesia’s education minister and GoTo Co-Founder, Mr. Nadiem Anwar Makarim at 20.50%.
Other backers of GoTo includes Alibaba, Astra, BlackRock, Capital Group, Facebook, Google, KKR, Softbank Vision Fund 1 and Temasek.
Source: GoTo IPO Prospectus
Based on what we can see above, huge increase in the asset from 30,108,570 m rph to 148,212,737 m rph is due to the increase in 93,873,046 m in goodwill, probably due to the merger.
An increase in asset due to goodwill gives it the chance of future write-downs, if the value of the company decrease in the future.
Source: GoTo IPO Prospectus
It’s liabilities has also been increasing (both short and long-term liabilities) by around four-fold from 2018 to 2021.
The accumulated losses increase from 20,438,041 m rph in 2018 to 65,286,739 m rph in 2021.
From what we can see so far, it is obvious that GoTo is a company that is still looking to expand and is in a growth stage.
GoTo is planning to IPO at rp338 per share, which is a valuation of about $27.8b, raising around $1.1 b.
Source: GoTo IPO Prospectus
Based on their prospectus, GoTo’s net revenues has been increasing from 1,436,511 m rph in 2018 to 3,327,875 m rph in 2020. This is an amazing increase in sales of around 100+% in 2 years.
From 1 January to 31 July 2021, their net revenues is at 2,516,300 m rph, which if we assume they will perform the same for 2nd half of 2021, it will be at around 5,000,000 m rph – which is around $348m.
That means that at a IPO valuation of about $27.8b in IDX, the price to sales ratio based on my assumption will be around 79 times.
If GoTo, continue to double its sales every 2 years, in another four years sales will be around $1.5b. And based on IPO valuation of $27.8b, that is around price to sales ratio of 18-19. Which in my view is still expensive.
In Summary
In summary, I think GoTo is an amazing business that is great for humanity.
I am personally a regular user of their GoFood in Indonesia and GoCar in Singapore.
And I would love to be a shareholder of GoTo one day, but hopefully at the right price.
The IPO valuation relative to it’s current sales and my future projections of its sales appear too expensive for my taste.
But let’s see how the IPO goes, I hope GoTo will still do well.
Even though I will not be a buyer of it’s IPO for now, I will definitely watch how GoTo perform over time in my watchlist.
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PS: I really love GoTo tagline: go far, go together.
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Chris Lee Susanto
Full-time investor, speaker, and editor of the investment blog Re-ThinkWealth.com and Founder at Value Investing Mentorship.
Chris started investing in stocks early at age 21 and is a big proponent of business-like stock investing – a mixture of both value and growth investing. He invests in companies where there is value to be found (as long as it is still within his circle of competence), be it a turnaround, depressed, value, or quality growth company (compounders). He either buys the stock outright or he profits through selling put or selling call options – or buying call options (buying and selling options are especially dangerous for those who do not know how to properly execute it).
Some of the places where Chris has been invited to speak or have added value as a mentor or writer includes Singapore Polytechnic, SMU Institute of Innovation and Entrepreneurship (IIE), Dollars and Sense, The New Savvy, Value Walk Blog, Investment Moats, NUS Tembusu College, NUS Investment Society, CGS-CIMB Singapore, Singapore Financial Conference by NTU IIC, The Financial Coconut Podcast, Money FM 89.3 and Internationally in Myanmar.
He is also a practitioner of Transcendental Meditation and Mindfulness practice. He also advocates regular exercise, enough sleep, and nutritious food as part of our lifestyle as an investor so that we can see things with a clearer lens and not be “caught” due to ignorance.
As of the time of this writing, Chris is focusing on setting up his MAS Licensed Fund with the goal to beat the market over the long run.
Join his FREE investment telegram channel here to be one of the first to be updated on his new articles.
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