Will it be OPEN To The Moon?

Bukalapak has officially opened its IPO in Indonesia and tomorrow (6/8) will be ready to take the floor on the stock exchange with the stock code BUKA. Recently, our market is also being hype related to technology, so with this OPEN IPO, we are also enlivening the technology trend.

The IPO of Bukalapak is in great demand by market players and even said to oversubscribe. However, many also say that the valuation of OPEN is already expensive and then they say that Bukalapak is not as busy as other e-commerce and rarely uses the Bukalapak application. Is that true? Will the dealer slam the price when listing it? Let’s review it here

How Expensive is OPEN?
Talking about valuation, there are actually many ways that can be used, the valuation metric that is suitable for OPEN is to use EV/Gross Profit. First of all, we know what EV is?

EV or Enterprise Value is a measure of the total value of a company. EV is more detailed in showing the true value of a company compared to market capitalization which tends to fluctuate following market prices.

Then, many also say that if you want to do a valuation in e-commerce you use EV/GMV, then why is OPEN the most suitable for using or EV/Gross Profit instead of EV/GMV?

In Bukalapak, GMV (Gross Merchandise Value) calculates the total gross transactions. Why dirty transactions? because transactions that are canceled after checkout from the cart are still counted in the total transaction automate trading.

We need to know, the difference between GMV and transactions that actually occur (already paid) in Indonesia can reach 30%. Therefore, the use of GMV is less relevant to use for Bukalapak’s valuation, because even in accounting records, OPEN uses the TPV benchmark compared to GMV

Compared to talking about the top line, how about we look at the use of EV/Gross Profit which is also used by various e-commerce companies in other parts of the world. By using Gross Profit, it has taken into account selling expenses, so it is fairer to calculate the valuation and compare it with competitors in similar sectors. We can see below that there is a comparison of Bukalapak’s EV/Gross Profit with its peers:

EV/Gross Profit Comparison

For the record, Jumia is eCommerce from England and MercadoLibre e-Commerce from Argentina, which of course is in better economic condition than Emerging markets like Indonesia, so if we look at the comparison, Sea Ltd and Shopify, Bukalapak’s EV/Gross Profit value is still far below it, which means compared to its peers. Bukalapak is still quite cheap. Moreover, seeing the potential for E-Commerce in Indonesia which is starting to creep up, the potential for growth in Indonesia is still quite large compared to countries in the west which are more mature than Indonesia.

On the other hand, Bukalapak itself uses EV/TPV to evaluate. TPV (Total Processing Value) is the total transaction that actually occurred. Looking at the table below, the EV/TPV value in 2020 is lower than in previous years. This means that in terms of valuation, Bukalapak’s EV/TPV is quite cheap.

Bukalapak Financial Highlights

In addition, looking at the Bukalapak business segment that contributes to TPV, it is still dominated by the Marketplace segment, and if we look at the graph below, the TPV of the marketplace and partner segments for the past 3 years has always been increasing. This increase has the potential to increase revenue, because Bukalapak’s revenue is derived from a commission (take rate) from every transaction that occurs.

Bukalapak Total Processing Value (TPV) (IDR Bn)

You Don’t Use Bukalapak? This does not mean that Bukalapak is not used in other parts of Indonesia.
Because many say they rarely use the Bukalapak application, what will the prospects be? If …

Then, many also say that if you want to do a valuation in e-commerce you use EV/GMV, then why is OPEN the most suitable for using or EV/Gross Profit instead of EV/GMV?

EV/Gross Profit Comparison