Number one retailer and leading distributor of mobile product
According to Frost & Sullivan market analysis, Trikomsel (TRIO) is ranked No. 1 retailer and prominent distributor of mobile communication devices for five leading International brand (Nokia, Blackberry, Samsung, HTC and Sony in Indonesia with 30% market share) and services in Indonesia. TRIO is also an authorized distributor of reload vouchers, SIM starter packs and other products for all major Indonesian mobile network operators such as Telkomsel, XL, Indosat, Axis, Smartfren and Three. The company generates revenue through its distribution networks and retail shops, under 707 units of “Oke Shop” and 320 units of “Global Teleshop” stores brand across 175 cities in 33 provinces in Indonesia.
Global Teleshop stores are run by its listed subsidiary Global Teleshop (GLOB). TRIO just recently increased its stake in GLOB from 72% to around 90%.
Enjoying mobile data growth
We believe TRIO’s leading position puts it in the sweet spot in the Indonesian handset market. Mobile data penetration Indonesia is still relatively low (59%) and we expect to continue to rise rapidly over the next few years as: 1) The familiarity of Indonesians on the useful information and content from internet has been extensively increasing 2) Indonesia is one of the largest social networking markets in the world (4th highest number of Facebook user globally) and 3) Smartphone’s and tablets are really taking off here and internet or data need would be met by wireless networks as the fixed line penetration in Indonesia is still considered small. On the supply side, high-speed networks, affordable
data pricing and intuitive-to-use smart devices make it easy for consumers to access the internet on the go. Additionally, Frost & Sullivan data revealed that on average, Indonesians replaced their mobile communication device every 7.6 months in 2011, a significant decline from 12.4 months in 2008. This is also an indication that mobile devices
have become a lifestyle product.
GLOB is more attractive to invest
Among all listed handset distributors and retailers in Indonesia, we found that GLOB displays strongest profitability metrics, most attractive valuation, and also a robust earning growth. GLOB’s profits leap out growing by 69% yoy in 1q13, beating all its peers versus ERAA’s of -5.3% and TELE’s of +32.7%. In terms of gross margin, GLOB was a creditable
11.4% – the second highest after TRIO’s 14.1% – and ahead of ERAA 8.9% and TELE’s 5.5%. GLOB’s ROE also outclassed its peers with a 38% vs TRIO’s of 24.6%, ERAA’s of 15.3% and TELE’s of 25.5%. Valuation wise, GLOB is also the cheapest counter with 2013 PER of 9x (annualizing 1q13 profit) compared to average peers (excluding GLOB) of 15.3x.
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