The Segment That Should Show Go-Jek's Impact Just Got Worse
Last quarter's report closed with a direct ask: report how much volume is actually coming through the Go-Jek/Go-Car tie-up, rather than leaving investors to infer the relationship's value from a stock chart. Five months after the February 1, 2017 go-live, this filing's own "Significant Agreements" footnote answers that ask with the exact same paragraph as before - the May 2016 MoU with PT Aplikasi Karya Anak Bangsa (AKAB), described in the same generic "technology, payment system, and promotion" language, with no volume figure, no revenue line, no operational KPI attached to it. Silence has now had two full quarters to become a pattern rather than an early gap.
What makes that silence harder to wave away this quarter is where the numbers actually went. Indonesia's OJK-mandated interim filing reports six-month cumulative figures for the period ended June 30, 2017 rather than a discrete second quarter, so - following the same methodology used in Q2 2016's and Q3 2016's reports - every standalone Q2 2017 number below is derived by subtracting the already-published Q1 2017 figures from this filing's H1 total. On that basis, standalone Q2 2017 net revenue fell 12.9% year-over-year to Rp1,042.2 billion, and operating income fell 30.2% to Rp108.0 billion - declines in the same range as Q1's own -18.4%/-19.9%. But the segment that would actually carry Go-Jek/Go-Car charter volume - Non-Taxi - had its revenue fall 9.6% year-over-year this quarter, reversing the barely-positive growth Q1 2017 reported, and fell 5.6% quarter-on-quarter in absolute terms even as Taxi's own standalone revenue ticked up 1.5% sequentially (still down 13.6% YoY). If a genuine ride-hailing distribution channel were adding volume to Non-Taxi, this is close to the last quarter you'd expect its growth to break a second time.
None of this proves the integration is worthless - a channel can exist and simply not yet be material, or its volume could be booked inside Taxi rather than Non-Taxi depending on which fleet actually fulfills Go-Car orders. But that's exactly the kind of question a single disclosed metric would resolve, and two consecutive quarters without one is no longer an oversight the company can claim ignorance of - The Prescription asked for it explicitly last quarter.
The stock, meanwhile, kept rallying. Shares closed at Rp4,810 on June 30, 2017, up 24.6% from March's Rp3,860 - a second consecutive double-digit quarterly gain, and a cumulative 60.3% rise since December 2016's Rp3,000 close (see Stock Price).
The Prescription
Blue Bird should stop treating "we signed a partnership" as a strategic update and start publishing an actual Go-Jek/Go-Car channel metric - rides fulfilled, revenue contribution, even just a qualitative "material" or "immaterial" flag - the next time this filing is due. Two consecutive quarters of the identical boilerplate paragraph, sitting next to a Non-Taxi segment whose growth just broke for the second time in three quarters, reads less like patience and more like there's nothing yet worth disclosing - and if that's the truth, saying so plainly would be more credible than saying nothing at all.
What it should stop doing: letting Taxi's operating margin collapse from 13.6% (Q1 2017) to 8.0% (Q2 2017, standalone) in a single quarter while the segment's own revenue barely moved (+1.5% quarter-on-quarter). Taxi's operating income fell 40.4% sequentially on almost-flat revenue - this is a cost problem, not a volume problem, and it's happening inside the segment management itself still calls the core business, at the same time as Rp2.6 trillion of bank credit facilities (see Beyond the Usual) sit almost entirely undrawn for a third straight quarter.
Key Financial Metrics
Q2 2017 vs. Q2 2016 (P&L, standalone quarter, derived - see note below), and Jun 2017 vs. Dec 2016 (balance sheet, HoH) - consolidated
FX: IDR 13,278 = USD 1 (June 29, 2017 close, the last trading day of the quarter).
Standalone-quarter P&L figures below are derived by subtracting the Q1 2017 post's already-published figures from this filing's six-month cumulative totals for the periods ended June 30, 2017 and 2016 - Blue Bird's interim financial statement reports year-to-date, not discrete-quarter, P&L, the same situation covered in Q2 2016's report. Both years are derived identically, so the YoY comparison is real even though neither number is a directly-quoted line in either filing.
| Metric | Q2 2017 (IDR) | Q2 2017 (USD) | Q2 2016 (IDR) | YoY |
|---|---|---|---|---|
| Net Revenue | Rp1,042.2B | ~$78.5M | Rp1,196.7B | ⚠️ -12.9% |
| Adjusted EBITDA» (Operating Income + D&A) | Rp280.6B | ~$21.1M | Rp339.8B | ⚠️ -17.4% |
| Operating Income» | Rp108.0B | ~$8.1M | Rp154.7B | ⚠️ -30.2% |
| Net Income» (attributable to owners) | Rp75.6B | ~$5.7M | Rp90.7B | ⚠️ -16.7% |
| Free Cash Flow» (Op. CF minus capex) | Rp85.0B | ~$6.4M | -Rp69.5B | ✅ swung positive |
| Total Cash (period-end) | Rp592.0B | ~$44.6M | Rp371.7B | ✅ +59.3% |
| EPS (basic) | Rp30 | ~$0.0023 | Rp37 | ⚠️ -18.9% |
Every line that fell in Q1 2017 fell again this quarter, and operating income fell faster than revenue for a second straight quarter - operating margin compressed to 10.4% (Rp108.0B / Rp1,042.2B) from Q1's already-weaker 16.7%, a bigger single-quarter drop than anything Q1's report itself flagged. On the six-month cumulative basis the filing actually reports, gross margin held roughly flat (27.5% vs 27.3% a year ago) and operating margin compressed to 13.5% from 15.1% - so the standalone-quarter deterioration is real and not just an artifact of the subtraction method.
Free cash flow swung positive for a second consecutive quarter (Rp85.0B vs -Rp69.5B a year ago), continuing the pattern Q1 2017's report flagged - capex stayed depressed while operating cash flow held up reasonably well. Total cash rose 59.3% year-over-year against an unusually cash-poor Q2 2016 comparison, but fell 13.4% quarter-on-quarter from March's Rp683.2B - almost the entire H1 2017 dividend declaration (see Beyond the Usual) landed in this quarter's cash movement.
| Balance sheet metric | Jun 2017 (IDR) | Jun 2017 (USD) | Dec 2016 (IDR) | HoH |
|---|---|---|---|---|
| Total Assets | Rp7,002.9B | ~$527.4M | Rp7,300.6B | ⚠️ -4.1% |
| Total Liabilities | Rp2,299.5B | ~$173.2M | Rp2,637.9B | ✅ -12.8% |
| Total Equity | Rp4,703.5B | ~$354.2M | Rp4,662.7B | ✅ +0.9% |
| Debt-to-Equity Ratio» (company-disclosed) | 0.49x | - | 0.56x | ✅ improved |
Leverage improved for a fifth straight half-year period, extending the deleveraging trend Q1 2017's report tracked - loan repayment (Rp505.5B this half, none newly drawn) keeps outpacing borrowing, even with Rp2.6 trillion of facilities still sitting almost entirely idle (see Beyond the Usual).
Segment Performance
Blue Bird still reports the same two operating segments - Taxi and Non-Taxi - unchanged since Q1 2016's two-segment collapse.
Taxi
Standalone Q2 2017 net revenue Rp864.5B (-13.6% YoY), operating income Rp69.2B (-31.4% YoY), operating margin 8.0% (down sharply from Q1 2017's 13.6% and from a year ago's 10.1%). The notable detail here isn't the YoY decline - it's the quarter-on-quarter shape: revenue actually rose 1.5% from Q1's Rp851.9B, while operating income fell 40.4% from Q1's Rp116.1B over the same stretch - a segment whose top line stabilized but whose profitability kept collapsing, which points at cost or pricing pressure inside the segment rather than continued volume loss (see The Prescription).
Non-Taxi
Standalone Q2 2017 net revenue Rp177.6B (-9.6% YoY), operating income Rp38.7B (-28.2% YoY), operating margin 21.8% (down from Q1 2017's 30.8% and a year ago's 27.4%). This is the second growth-streak break in three quarters for a segment Q4 2016's report first flagged as no longer reliably growing, and it undercuts the growth story Q1 2017's barely-positive +0.5% represented - this segment is now shrinking on both lines, at the same time the market is pricing in a distribution partnership that would be expected to show up here first (see the opening section above).
Segment Comparison
| Segment | Revenue (Q2 2017, standalone) | YoY Growth | QoQ Growth | Operating Margin |
|---|---|---|---|---|
| Taxi | Rp864.5B (83.0%) | ⚠️ -13.6% | ✅ +1.5% | ⚠️ 8.0% |
| Non-Taxi | Rp177.6B (17.0%) | ⚠️ -9.6% | ⚠️ -5.6% | ⚠️ 21.8% |
Non-Taxi's revenue share of the group actually fell this quarter (18.1% in Q1 2017 to 17.0% now) - the first time since Q1 2016's two-segment disclosure began that this mix-shift moved in Non-Taxi's disfavor, since every prior quarter's climb was purely mechanical (Taxi eroding faster than Non-Taxi grew). This quarter reversed that mechanism entirely: Taxi held its revenue roughly flat sequentially while Non-Taxi fell, so the segment mix moved back toward Taxi even as Taxi's own profitability got worse. Segment assets tell a related story - Taxi's own asset base fell 6.8% year-over-year (Rp7,434.8B vs Rp7,974.4B) while Non-Taxi's grew only 7.4% (Rp1,604.3B vs Rp1,494.0B), a sharp deceleration from Q1 2017's 28.9% Non-Taxi asset growth rate.
Key Operational Metrics
- Geographic split (standalone Q2 2017, derived): Jadetabek (Jakarta, Depok, Tangerang, Bekasi) revenue was ~Rp795.9B (76.4% of standalone quarterly net revenue), down ~11.9% YoY; revenue from outside Jadetabek was ~Rp246.2B (23.6%), down ~16.2% YoY. This is a reversal from the usual pattern this site has tracked - outside-Jadetabek revenue fell faster than the metro core this quarter, rather than partially offsetting it.
- Permanent employees (Group): 3,867 (Jun 2017), down 2.8% from 3,980 (Dec 2016 and Mar 2017) - the headcount plateau Q1 2017's report noted has ended, and net reduction has resumed.
- Weighted average shares outstanding: 2,502,100,000, unchanged since the IPO - no further dilution.
- Not available this quarter: a granular Regular Taxi/Executive Taxi/Bus/Rental revenue split (still collapsed into the two-segment disclosure flagged as far back as Q1 2016), and - again - any Go-Jek/Go-Car integration volume or revenue metric (see the opening section above). No presentation deck or transcript exists for this filing to fill either gap.
Beyond the Usual
Rp2.6 trillion in bank credit facilities are still almost entirely undrawn, unchanged for a third straight report
As of June 30, 2017, the same four unused facilities Q1 2017's report flagged remain essentially untouched: Rp250.0 billion from OCBC (100% unused), Rp1,541.8 billion from Bank Mandiri (96.4% unused, out of the Rp1.6 trillion facility), Rp500.0 billion from Sumitomo Mitsui (100% unused), and Rp300.0 billion from MUFG (100% unused) - Rp2,591.8 billion in aggregate committed capacity, a figure essentially identical to March's, against a small further loan repayment this half. A capital structure this conservative, held for a third consecutive quarter without any new drawdown, is no longer a temporary financing gap - it's a standing capital-allocation choice management hasn't explained.
The Rp1.6 trillion 2016 Nissan Motor Distributor Indonesia tort claim, filed in December 2016 over an alleged breach of an MoU and flagged as unresolved in Q1 2017's report, was dismissed in full by the South Jakarta District Court on June 21, 2017 - the court denied all of Nissan's claims and ordered Nissan to pay court costs, with no further legal action taken by Nissan as of this filing's authorization date. It's a clean, favorable resolution to a thread this site has tracked as open for two quarters. The separate Big Bird-related shareholder litigation (the Lani Wibowo/Elliana Wibowo suits tracked since Q1 2015, including the partial appeal loss FY2016's report flagged) remains unchanged this quarter - still pending Cassation at the Supreme Court, with no decision issued as of the report date.
The Company's Annual General Meeting on June 9, 2017 approved a cash dividend of Rp152.6 billion (Rp61 per share) from 2016 earnings - down 7.6% per share from the Rp165.1 billion (Rp66 per share) dividend approved for 2015 earnings a year earlier, tracking the profit decline this site has followed all year. Of that amount, Rp141.9 billion (92.9%) remained an unpaid dividend payable as of June 30, 2017, simply because the approval landed only nine days before quarter-end - a timing artifact, not a liquidity signal, but worth noting since it's what actually drove total cash down quarter-on-quarter (see Key Financial Metrics above).
Related-party rent kept normalizing, continuing the multi-quarter drift Q1 2017's report and earlier ones tracked: H1 2017 related-party rent expense fell to Rp17.8 billion (65.9% of total rent expense) from Rp19.8 billion (66.8%) a year earlier - both the absolute amount and the related-party share continue drifting down, though slowly.
The Rp950.4 billion land-purchase commitment from December 2012 shows the same stall FY2016's report flagged: the realized portion, 100,931 square meters, is unchanged from both December 2016 and the multi-year plateau before it - no further tranche closed this half either.
Stock Price: A Second Straight Double-Digit Quarter
Blue Bird's shares closed at Rp4,810 on June 30, 2017 (no stock split has occurred since, so this is directly comparable to prior periods reported here) - up 24.6% from March's Rp3,860 close, following Q1 2017's 28.7% rally and extending the same Go-Jek/Go-Car re-rating narrative into a second quarter. Cumulatively, the stock has risen 60.3% since December 2016's Rp3,000 close - the strongest two-quarter run this site has tracked for the stock. Against the Rp6,500 IPO price (November 2014), the stock is now down only 26.0%, a large further improvement from Q1 2017's 40.6% discount. Over the trailing two years (June 2015 to June 2017), the stock is down from Rp7,950 to Rp4,810 - a 39.5% decline across that window, a materially smaller decline than Q1 2017's trailing-two-year comparison showed (-61.2% over March 2015 to March 2017).
Unlike Q1 2017 - where the rally coincided with a specific, dated catalyst (the February 1, 2017 go-live) - this quarter's continued strength has no equivalent new trigger disclosed in the filing itself. The market appears to be extending the same platform-distribution bet a second quarter running, even as the segment that bet depends on just posted a second growth-streak break.
Target Valuation Range
Enterprise value ~Rp13,743B (~$1.035B), implying ~31.2x annualized P/E and ~2.60x P/B - overvalued against every multiple this site tracks for the stock, and more so than last quarter. The re-rating that Q1 2017 flagged as running ahead of the fundamentals has kept running while the fundamentals themselves got worse, not better.
Against this quarter's numbers (2,502,100,000 shares outstanding, unchanged):
| Market cap → enterprise value | Q2 2017 |
|---|---|
| Share price (period-end) | Rp4,810 |
| Shares outstanding | 2,502,100,000 |
| Market capitalization | ~Rp12,035.1B (~$906.4M) |
| Total liabilities | ~Rp2,299.5B |
| Less: cash and equivalents | ~Rp592.0B |
| Enterprise value | ~Rp13,743B (~$1.035B) |
Market cap is up 24.6% from ~Rp9,658.1B at Q1 2017's close.
| Peer-multiple sanity check | Q1 2017 | Q2 2017 |
|---|---|---|
| P/E (annualized) | ~20.5x | ~31.2x (H1 2017 EPS Rp77 × 2 = Rp154) |
| P/B | ~2.05x | ~2.60x (book value/share ~Rp1,850) |
| Annualized ROE | ~10.1% | ~8.4% |
| Annualized ROA | ~6.5% | ~5.4% |
Every multiple moved further in the wrong direction for a value case for a second consecutive quarter: P/E and P/B both expanded again while ROE and ROA both fell again. Q1 2017's report called this "a genuine case of the market pricing a strategic narrative ahead of any number that would justify it on its own" and left open whether the Go-Jek integration would show up in the numbers to close that gap. It didn't - if anything, the segment most likely to carry that volume moved backward. A re-rating that survives one quarter without supporting numbers can be patience; surviving two quarters while the underlying segment gets worse is a bet the market hasn't yet been asked to defend.
PT Blue Bird Tbk's consolidated financial statements for the six-month periods ended June 30, 2017 and 2016, authorized for issue July 27, 2017.