The Rally Paused. The Footnote Didn't Move Either.
Two straight quarters of double-digit rallies - 28.7% in Q1 2017, 24.6% in Q2 2017 - ended this quarter. Blue Bird's shares closed at Rp4,880 on September 29, 2017 (the last trading day of the quarter, since September 30 fell on a Saturday), up just 1.5% from June's Rp4,810. It's the calmest quarter this stock has posted since the Go-Jek/Go-Car re-rating started, and it arrives in the same filing whose "Significant Agreements" footnote - the May 2016 MoU with PT Aplikasi Karya Anak Bangsa (AKAB) - is, for the third consecutive report, word-for-word identical to March's and June's: no volume figure, no revenue line, no operational KPI. Eight months after the February 1, 2017 go-live, the company still hasn't disclosed a single number describing what the partnership is actually doing.
What makes the timing notable isn't that the silence continued - Q2's report already called two quarters of it "no longer an oversight." It's that the market's patience appears to have run out at almost exactly the same moment. A rally built on an undisclosed catalyst either needs the catalyst to show up in the numbers or it needs a new story - and this quarter, for the first time since the re-rating began, neither happened, and the stock just... stopped moving much.
The underlying numbers, meanwhile, did something the last two quarters didn't: they partially recovered. Indonesia's OJK-mandated interim filing reports nine-month cumulative figures for the period ended September 30, 2017, so - following the same subtraction methodology used in every quarter this site has tracked, including Q2 2017's - standalone Q3 2017 figures below are derived by subtracting the already-published H1 2017 total (Q1 + Q2 2017 combined) from this filing's nine-month total. On that basis, standalone Q3 2017 net revenue fell 10.6% year-over-year to Rp1,049.1 billion, but operating income rose 24.2% quarter-on-quarter to Rp134.1 billion - the first sequential improvement in operating income since Q4 2016. It's still down 36.1% from a year ago, so this isn't a turnaround; it's the business clawing back some of the ground Q2's cost-driven margin collapse (see Q2's Prescription) gave up.
A rally that ran two quarters ahead of the fundamentals just met a quarter where the fundamentals actually moved toward it a little, and the market's response was to do almost nothing - which is either the market finally pricing the stock closer to what the business is actually producing, or it's simply waiting for the next signal, favorable or not.
The Prescription
Blue Bird should treat this quarter's operating-income rebound as the opening argument for finally disclosing something concrete about Go-Jek/Go-Car - not more of the same MoU paragraph, but an actual number, even a small or unflattering one. Three consecutive quarters of identical boilerplate, sitting next to a stock that just had its calmest quarter in a year, is a signal the market may be losing interest in a story management has never actually supported with data. If the integration is genuinely immaterial, saying so is more credible - and probably better for the stock - than another quarter of silence inviting readers to assume the worst.
What it should stop doing: continuing to let Non-Taxi shrink sequentially without comment. The segment fell 5.6% quarter-on-quarter in Q2 and 2.6% quarter-on-quarter this quarter (see Segment Performance) - two straight quarters of sequential decline in the segment that would carry any ride-hailing distribution volume, at the exact moment the market was pricing that volume in. Management's commentary hasn't acknowledged this once in three quarters of filings.
Key Financial Metrics
Q3 2017 vs. Q3 2016 (P&L, standalone quarter, derived - see note below), and Sep 2017 vs. Dec 2016 (balance sheet, 9-month) - consolidated
FX: IDR 13,508 = USD 1 (September 28, 2017 close, the last trading day with a recorded month-end rate).
Standalone-quarter P&L figures below are derived by subtracting the already-published H1 2017 total (Q1 2017's Rp1,039.9B/Rp174.1B/Rp117.5B net revenue/operating income/net income plus Q2 2017's Rp1,042.2B/Rp108.0B/Rp75.6B) from this filing's nine-month cumulative totals for the periods ended September 30, 2017 and 2016 - the same situation covered in Q3 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 | Q3 2017 (IDR) | Q3 2017 (USD) | Q3 2016 (IDR) | YoY |
|---|---|---|---|---|
| Net Revenue | Rp1,049.1B | ~$77.7M | Rp1,173.6B | ⚠️ -10.6% |
| Adjusted EBITDA» (Operating Income + D&A) | Rp291.3B | ~$21.6M | Rp394.7B | ⚠️ -26.2% |
| Operating Income» | Rp134.1B | ~$9.9M | Rp210.0B | ⚠️ -36.1% |
| Net Income» (attributable to owners) | Rp109.0B | ~$8.1M | Rp131.9B | ⚠️ -17.4% |
| Free Cash Flow» (Op. CF minus capex) | Rp187.0B | ~$13.8M | Rp151.3B | ✅ +23.6% |
| Total Cash (period-end) | Rp499.9B | ~$37.0M | Rp338.0B | ✅ +47.9% |
| EPS (basic) | ~Rp44 | ~$0.0033 | ~Rp53 | ⚠️ -17.0% |
Every YoY line is still negative, but operating income's own trajectory changed shape: it fell 30.2% quarter-on-quarter in Q2, then rose 24.2% quarter-on-quarter this quarter, to Rp134.1B from Rp108.0B. Gross margin compressed to 26.6% (Q3 2016: 29.2%) and operating margin to 12.8% (Q3 2016: 17.9%) - both worse YoY, but operating margin recovered from Q2's 10.4% low. Adjusted EBITDA margin fell to 27.8% from 33.6% a year ago, a bigger compression than operating margin's, because D&A (Rp157.2B this quarter) barely moved while revenue kept falling.
Free cash flow improved both YoY (+23.6%) and stayed positive for a third consecutive quarter, continuing the pattern Q1 2017 and Q2 2017 both flagged - capex remained well below pre-2017 levels while operating cash flow held up. Total cash fell 15.6% quarter-on-quarter from June's Rp592.0B, driven by Rp763.5B of long-term bank loan repayment during the nine months (with zero new drawdowns) against only Rp771.1B of nine-month operating cash flow - the deleveraging is being funded largely out of operations, not held-back capex alone.
| Balance sheet metric | Sep 2017 (IDR) | Sep 2017 (USD) | Dec 2016 (IDR) | Change |
|---|---|---|---|---|
| Total Assets | Rp6,746.0B | ~$499.4M | Rp7,300.6B | ⚠️ -7.6% |
| Total Liabilities | Rp1,932.9B | ~$143.1M | Rp2,637.9B | ✅ -26.7% |
| Total Equity | Rp4,813.2B | ~$356.3M | Rp4,662.7B | ✅ +3.2% |
| Debt-to-Equity Ratio» (total liabilities / total equity) | 0.40x | - | 0.56x | ✅ improved |
Leverage kept improving, extending the deleveraging trend Q1 2017's and Q2 2017's reports both tracked - DER fell further than Q2 2017's 0.49x, even with Rp2.6 trillion of bank facilities still sitting almost entirely undrawn for a fourth straight report (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 Q3 2017 net revenue Rp876.1B (-11.0% YoY, +1.3% QoQ), operating income Rp89.8B (-41.0% YoY, +29.8% QoQ), operating margin 10.3% - up from Q2 2017's 8.0% low but still well short of Q1 2017's 13.6%. This is the second straight quarter of sequential revenue growth for the segment (Q2: +1.5%, Q3: +1.3%) even as YoY decline rates stayed in the double digits, and the first quarter since Q1 2017 where margin actually moved in the right direction sequentially - a partial recovery from the cost pressure Q2's report flagged, not a reversal of it.
Non-Taxi
Standalone Q3 2017 net revenue Rp173.0B (-8.6% YoY, -2.6% QoQ), operating income Rp44.4B (-23.1% YoY, +14.7% QoQ), operating margin 25.7% - up from Q2 2017's 21.8% but still below Q1 2017's 30.8%. Revenue fell sequentially for a second consecutive quarter (Q2: -5.6%, Q3: -2.6%), even as the rate of decline slowed - this is now a genuine trend, not a one-quarter blip, and it's happening in the segment that would carry any Go-Jek/Go-Car distribution volume (see the opening section above). Operating income recovered faster than revenue this quarter, so margin improved even with a shrinking top line - a mirror of what happened in Taxi.
Segment Comparison
| Segment | Revenue (Q3 2017, standalone) | YoY Growth | QoQ Growth | Operating Margin |
|---|---|---|---|---|
| Taxi | Rp876.1B (83.5%) | ⚠️ -11.0% | ✅ +1.3% | ⚠️ 10.3% |
| Non-Taxi | Rp173.0B (16.5%) | ⚠️ -8.6% | ⚠️ -2.6% | ✅ 25.7% |
Non-Taxi's revenue share fell again this quarter (17.0% in Q2 2017 to 16.5% now) - the second straight quarter the mix moved in Non-Taxi's disfavor, after Q2's report flagged the first such reversal in this site's coverage. Both segments are now improving margin sequentially off a low base, but only Taxi is actually growing revenue sequentially - Non-Taxi's operating-income rebound is coming from cost control inside a shrinking segment, the same dynamic Taxi displayed in Q2.
Key Operational Metrics
- Geographic split (standalone Q3 2017, derived): Jadetabek (Jakarta, Depok, Tangerang, Bekasi) revenue was ~Rp811.1B (77.3% of standalone quarterly net revenue), roughly flat with Q2's 76.4% share; revenue from outside Jadetabek was ~Rp237.9B (22.7%).
- Permanent employees (Group): 3,686 (Sep 2017), down 4.7% from 3,867 (Jun 2017) and down 7.4% from 3,980 (Dec 2016) - headcount reduction resumed and accelerated after Q2 2017's report noted the plateau had ended.
- 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 fourth straight report
As of September 30, 2017, the same four facilities Q1 2017's report first 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, identical in nominal terms to every quarter since March, even as the company repaid a further Rp763.5 billion of drawn debt this period with zero new drawdowns. A capital structure held this conservative for four consecutive quarters, alongside a debt-to-equity ratio that keeps falling (0.40x, down from 0.56x at the start of the year), is no longer a temporary financing gap - it's a standing choice management still hasn't explained.
The Rp1.6 trillion Nissan Motor Distributor Indonesia tort claim, dismissed in full by the South Jakarta District Court on June 21, 2017 and flagged as a favorable resolution in Q2 2017's report, remains closed - this filing confirms no further legal action was taken by the plaintiff as of the report's October 26, 2017 authorization date. The separate Big Bird-related shareholder litigation (the Lani Wibowo/Elliana Wibowo suits tracked since Q1 2015) is unchanged this quarter - still pending Cassation at the Supreme Court, with no decision issued.
Related-party rent kept normalizing, continuing the multi-quarter drift Q2 2017's report tracked: nine-month related-party rent expense fell to Rp26.6 billion (65.5% of total rent expense) from Rp29.7 billion (63.4%) a year earlier - the absolute amount keeps falling even though the related-party share ticked up slightly this period.
The Rp950.4 billion land-purchase commitment from December 2012 shows the same stall Q2 2017's report and earlier ones flagged: the realized portion, 100,931 square meters, is unchanged from every prior period reported here - no further tranche closed this quarter either.
Stock Price: The Calmest Quarter Since the Re-Rating Began
Blue Bird's shares closed at Rp4,880 on September 29, 2017 (no stock split has occurred since, so this is directly comparable to prior periods reported here) - up just 1.5% from June's Rp4,810 close, a sharp deceleration from Q1 2017's 28.7% and Q2 2017's 24.6% rallies. Cumulatively, the stock has risen 62.7% since December 2016's Rp3,000 close, but almost all of that gain happened in the first two quarters of the year - this quarter added less than a fifth of what either prior quarter did on its own. Against the Rp6,500 IPO price (November 2014), the stock is now down 24.9%, a modest further improvement on Q2 2017's 26.0% discount. Over the trailing two years (September 2015 to September 2017), the stock is down from Rp6,600 to Rp4,880 - a 26.1% decline, continuing the pattern of narrowing trailing-two-year losses this site has tracked through 2017, and a much smaller decline than the 61.2%-to-39.5% range Q1 2017's and Q2 2017's reports showed for their own trailing windows.
A stock that rose 60%+ in six months on an undisclosed catalyst was always going to either keep climbing on faith or pause to see whether the fundamentals would catch up - this quarter, they moved a little (see the opening section), and the stock mostly just held its gains rather than adding to them.
Target Valuation Range
Enterprise value ~Rp13,643B (~$1.01B), implying ~30.2x annualized P/E and ~2.58x P/B - still overvalued against every multiple this site tracks, though the gap narrowed slightly this quarter - the first quarter since the re-rating began where the stock's move and the earnings' move pointed in roughly the same direction, rather than the stock racing ahead alone.
Against this quarter's numbers (2,502,100,000 shares outstanding, unchanged):
| Market cap → enterprise value | Q3 2017 |
|---|---|
| Share price (period-end) | Rp4,880 |
| Shares outstanding | 2,502,100,000 |
| Market capitalization | ~Rp12,210.2B (~$903.9M) |
| Total liabilities | ~Rp1,932.9B |
| Less: cash and equivalents | ~Rp499.9B |
| Enterprise value | ~Rp13,643B (~$1.01B) |
Market cap is up 1.5% from ~Rp12,035.1B at Q2 2017's close.
| Peer-multiple sanity check | Q2 2017 | Q3 2017 |
|---|---|---|
| P/E (annualized) | ~31.2x | ~30.2x (9M 2017 EPS Rp121 × 4/3 = Rp161) |
| P/B | ~2.60x | ~2.58x (book value/share ~Rp1,894) |
| Annualized ROE | ~8.4% | ~8.6% |
| Annualized ROA | ~5.4% | ~5.7% |
For the first time in three quarters, every multiple moved in the same direction a value case would want: P/E compressed, ROE and ROA both improved, and P/B stayed essentially flat rather than expanding. Q2 2017's report said "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." This quarter the market wasn't asked to defend it further - the stock barely moved - and the numbers used the pause to close part of the gap on their own. The re-rating is still ahead of the fundamentals, just by less than it was three months ago.
PT Blue Bird Tbk's consolidated financial statements for the nine-month periods ended September 30, 2017 and 2016, authorized for issue October 26, 2017.