The Recovery Streak Didn't Survive Its Third Quarter
Blue Bird's standalone operating income rose 24.2% quarter-on-quarter in Q3 2017, then a further 12.9% in Q4 2017 - two consecutive sequential recoveries this site tracked in detail, most recently in FY2017's report. Q1 2018 breaks that streak outright: standalone operating income fell 21.2% quarter-on-quarter to Rp119.3 billion, and net revenue fell 9.3% quarter-on-quarter to Rp973.4 billion - the sharpest sequential net-revenue decline this site has recorded outside a standalone Q4 quarter. Unlike Q2 2017 and Q3 2017, where one segment's weakness was usually offset by the other holding up, this quarter both Taxi (-24.6% QoQ operating income) and Non-Taxi (-16.1% QoQ operating income) declined together.
This is the first quarter in this filing series that reports a genuinely discrete period rather than a derived one - Q1 is always the first quarter of the fiscal year, so no subtraction from a cumulative total is needed, and every figure below is a number the filing states directly.
Two things happened alongside the reversal that are worth holding next to it. First, permanent headcount rose 5.2% quarter-on-quarter, to 3,630 from December's 3,452 - the first increase after several quarters of an accelerating reduction that FY2017's report called "the steepest single-quarter drop this site has recorded for this metric." Second, operating expenses rose 4.3% year-over-year even as net revenue fell 6.4% - the kind of divergence that, combined with the headcount reversal, looks less like a one-quarter blip and more like the cost discipline of the past year loosening right as the top line weakened again.
And the Go-Jek/Go-Car footnote? The "Significant Agreements" note covering the May 2016 MoU with PT Aplikasi Karya Anak Bangsa (AKAB) is, for the fifth consecutive filing this site has tracked - three quarterly reports, one annual report, now this one - substantively identical: the same May 2, 2016 signing date, the same November 1, 2016 amendment, the same absence of any volume or revenue figure. Two years into the partnership, Blue Bird still hasn't published a single number describing what it does.
The Prescription
Blue Bird should treat this quarter's dual-segment decline as a signal to stop reading Q3 and Q4 2017's recoveries as the start of a new trend and start asking what actually reversed. A two-quarter sequential recovery that breaks in the very next quarter, across both segments at once, isn't consistent with a single operational fix taking hold - it's more consistent with a temporary tailwind (cost cuts, a seasonal effect, or simply an easier prior-year comparison base) that ran its course. Diagnosing which of those it actually was matters more to the thesis than either extending or dismissing the recovery narrative on the strength of two data points.
What it should stop doing: growing headcount and letting operating expenses drift up year-over-year in the same quarter that both revenue and operating income are falling. The cost discipline that helped free cash flow nearly triple for full-year 2017 (see FY2017's report) was one of the only unambiguous positives in an otherwise mixed year - reversing it now, before the top line has actually stabilized, spends that credibility for no clear return this quarter.
Key Financial Metrics
Q1 2018 vs. Q1 2017, standalone quarter (both years reported directly, no derivation needed)
FX: IDR 13,756 = USD 1 (March 31, 2018); IDR 13,548 = USD 1 (December 31, 2017).
| Metric | Q1 2018 (IDR) | Q1 2018 (USD) | Q1 2017 (IDR) | YoY |
|---|---|---|---|---|
| Net Revenue | Rp973.4B | ~$70.8M | Rp1,039.9B | ⚠️ -6.4% |
| Adjusted EBITDA» (Operating Income + D&A) | Rp264.6B | ~$19.2M | Rp342.3B | ⚠️ -22.7% |
| Operating Income» | Rp119.3B | ~$8.7M | Rp174.1B | ⚠️ -31.5% |
| Net Income» (attributable to owners) | Rp98.9B | ~$7.2M | Rp117.5B | ⚠️ -15.8% |
| Free Cash Flow» (Op. CF minus capex) | Rp88.8B | ~$6.5M | Rp255.7B | ⚠️ -65.3% |
| Total Cash (period-end) | Rp615.6B | ~$44.8M | Rp683.2B | ⚠️ -9.9% |
| EPS (basic, quarter) | Rp38 | ~$0.003 | Rp47 | ⚠️ -19.1% |
Every line is down YoY, and - unlike the prior two quarters - every line is also down sequentially: net revenue fell 9.3% quarter-on-quarter from Q4 2017's Rp1,072.7B, Adjusted EBITDA fell 12.6% from Rp302.6B, operating income fell 21.2% from Rp151.4B, and net income fell 19.4% from Rp122.7B. Operating margin fell to 12.3% (Q1 2017: 16.7%, Q4 2017: 14.1%) - the weakest quarterly margin since Q4 2016's trough, reversing the recovery that had carried margin from Q2 2017's low back up through Q4.
Free cash flow collapsed both YoY (-65.3%) and QoQ (-57.3%, from Q4 2017's Rp207.9B), driven by acquisitions of fixed assets more than doubling to Rp176.3 billion from Rp68.3 billion a year earlier - a genuine capex step-up, not the capex-compression story that drove 2017's full-year free cash flow to nearly triple. Operating cash flow itself also fell, to Rp265.1 billion from Rp324.0 billion. Total cash rose 29.8% quarter-on-quarter to Rp615.6 billion despite the weaker cash flow, because the Group drew down Rp49.4 billion of new long-term bank loans during the quarter - the first new drawdown disclosed since the deleveraging campaign began (see Beyond the Usual).
| Balance sheet metric | Mar 2018 (IDR) | Mar 2018 (USD) | Dec 2017 (IDR) | Change |
|---|---|---|---|---|
| Total Assets | Rp6,637.9B | ~$482.7M | Rp6,516.5B | ✅ +1.9% |
| Total Liabilities | Rp1,607.4B | ~$116.9M | Rp1,585.6B | ⚠️ +1.4% |
| Total Equity | Rp5,030.4B | ~$365.7M | Rp4,930.9B | ✅ +2.0% |
| Debt-to-Equity Ratio» (total liabilities / total equity) | 0.32x | - | 0.32x | Flat |
Leverage stopped falling this quarter for the first time since the deleveraging campaign began - DER held flat at 0.32x rather than continuing the run of sequential improvement tracked every quarter through FY2017. Both liabilities and equity grew at roughly the same pace (+1.4% and +2.0%), so the plateau reflects overall balance-sheet growth rather than releveraging - but it does mark the end of four straight quarters of DER compression.
Segment Performance
Blue Bird still reports the same two operating segments - Taxi and Non-Taxi - unchanged since Q1 2016's two-segment collapse.
Taxi
Q1 2018 net revenue Rp789.8B (-7.3% YoY, -10.2% QoQ), operating income Rp69.2B (-40.4% YoY, -24.6% QoQ), operating margin 8.8% - down sharply from Q1 2017's 13.6% and Q4 2017's 10.4%, the weakest quarterly Taxi margin this site has recorded. Both the YoY and QoQ declines are the steepest of any Taxi quarter tracked since Q2 2016's erosion accelerated, reversing what Q3 and Q4 2017 had described as a stalling-but-not-reversing recovery.
Non-Taxi
Q1 2018 net revenue Rp183.6B (-2.4% YoY, -5.2% QoQ), operating income Rp50.1B (-13.6% YoY, -16.1% QoQ), operating margin 27.3% - down from Q4 2017's 30.8% but still the second-best quarterly margin of the past year. This breaks Q4 2017's sequential increase - the first in three quarters at the time - after just one quarter, meaning Non-Taxi has now grown sequentially in only one of the last four quarters tracked. Nothing in this filing attributes the decline to Go-Jek/Go-Car either way; the MoU footnote still carries no volume metric to check against (see the opening section above).
Segment Comparison
| Segment | Revenue (Q1 2018) | YoY Growth | QoQ Growth | Operating Margin |
|---|---|---|---|---|
| Taxi | Rp789.8B (81.1%) | ⚠️ -7.3% | ⚠️ -10.2% | ⚠️ 8.8% |
| Non-Taxi | Rp183.6B (18.9%) | ⚠️ -2.4% | ⚠️ -5.2% | ✅ 27.3% |
Both segments declined together on both a YoY and QoQ basis for the first time in this site's coverage of Blue Bird - every prior quarter had at least one segment growing or flat on one of the two comparisons. Revenue mix barely moved (Taxi 81.1% vs Q4 2017's 81.9%), so this isn't a mix story - it's a quarter where the whole business slowed at once, which is a different (and less easily explained) pattern than the alternating segment weakness this site has tracked since Q2 2017.
Key Operational Metrics
- Permanent employees (Group): 3,630 (Mar 2018), up 5.2% from 3,452 (Dec 2017) - reversing three straight quarters of headcount reduction, the last of which FY2017's report called the steepest single-quarter drop on record for this metric.
- Weighted average shares outstanding: 2,502,100,000, unchanged since the IPO - no further dilution.
- Geographic split: Jadetabek (Jakarta, Depok, Tangerang, Bekasi) revenue was Rp789.9B (81.2% of net revenue), down 1.6% YoY; revenue from outside Jadetabek was Rp183.5B (18.8%), down 22.6% YoY. This inverts the usual pattern this site has tracked since Q1 2016 - Jadetabek has almost always been the eroding half of the business, with outside-Jadetabek growth partly offsetting it. This quarter the metro core barely moved while everywhere else fell sharply (see Beyond the Usual).
- Still not available: 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 the gap.
Beyond the Usual
The Nissan litigation gets a second favorable ruling, but the plaintiff keeps escalating
FY2017's report flagged that Nissan Motor Distributor Indonesia's appeal of its dismissed breach-of-contract claim was still pending before the Jakarta High Court. This filing shows that on March 23, 2018, Blue Bird received formal notification that the Jakarta High Court sustained the original dismissal - a second consecutive win for the company. But Nissan didn't stop there: it filed a cassation to the Supreme Court, and Blue Bird received formal notification of that cassation on April 23, 2018, after this quarter's period end but before the report's authorization. Two wins in a row is a meaningfully stronger position than the prior report's "under appeal, status unclear" - but a third-tier appeal to the Supreme Court means the case remains open, not closed, for a second straight report.
A credit facility's own footnote shows it expired before this report was issued
The MUFG short-term facility - tracked in every quarterly report since Q1 2017 - is described in this filing's own "Significant Agreements" note as available "from March 23, 2017 until March 23, 2018." That end date falls squarely inside the period this filing covers, yet the same filing's "Unused Credit Facility" disclosure still lists the Rp300 billion MUFG line as available, carried forward with no mention of renewal, replacement, or expiry. Either the facility was quietly renewed and the filing didn't say so, or a Rp300 billion credit line included in the company's disclosed liquidity cushion had already lapsed by the report's own terms.
Headcount grew and operating expenses rose YoY in the same quarter operating income fell 31.5%
Permanent employees rose 5.2% quarter-on-quarter (see Key Operational Metrics) while consolidated operating expenses rose 4.3% year-over-year against a 6.4% net revenue decline - the opposite of the cost discipline that helped free cash flow nearly triple for full-year 2017. One quarter isn't a trend, but it's the first quarter in over a year where headcount and opex both moved against the direction of revenue and operating income at the same time.
The Jadetabek/outside-Jadetabek erosion pattern flips for the first time this site has tracked
Every geographic split this site has recorded since Q1 2016 has shown Jadetabek (Jakarta, Depok, Tangerang, Bekasi) as the eroding half of the business, with revenue from outside the metro area holding up or growing to partly offset it - most recently confirmed in Q1 2017. This quarter inverts that pattern: Jadetabek revenue fell just 1.6% year-over-year to Rp789.9 billion, while revenue from outside Jadetabek fell 22.6% to Rp183.5 billion - the metro core barely moved while everywhere else the Group operates dropped sharply. Whether this reflects the metro taxi business genuinely stabilizing or the provincial/rental side hitting a real air pocket isn't something this filing's segment note distinguishes.
The parent-entity-only (unconsolidated) financial statements attached to this filing - a standard Indonesian regulatory attachment, not part of the consolidated figures used elsewhere in this post - show PT Blue Bird Tbk on a standalone basis posted an operating loss of Rp12.7 billion for Q1 2018, versus a marginal Rp0.5 billion operating profit in Q1 2017. The holding company's own revenue is intercompany service and management fee income from subsidiaries, not fare revenue, so this loss says nothing about the operating business - but it's a reminder that the parent entity's standalone economics look nothing like the consolidated group's, since its total income for the period (Rp9.0 billion) came almost entirely from interest income on intercompany balances rather than from operations.
The Rp950.4 billion land-purchase commitment first tracked in FY2017's report - where the realized portion for the same December 2016 date had been quietly revised upward between the 2016 and 2017 annual reports - shows no further movement this quarter: 125,427 square meters realized as of both March 31, 2018 and December 31, 2017, identical to the figure this filing's own comparative column reports for year-end. No new discrepancy this time.
Stock Price: A Second Straight Down Quarter
Blue Bird's shares closed at Rp2,880 on March 30, 2018 (no stock split has occurred since, so this is directly comparable to prior periods reported here) - down 16.8% from December's Rp3,460, extending Q4 2017's 29.1% collapse into a second consecutive down quarter and erasing what remained of 2017's full-year gain. Against the Rp6,500 IPO price (November 2014), the stock is now down 55.7% - steeper than Q4 2017's 46.8% and the widest IPO discount this site has recorded. Over the trailing two years (March 2016 to March 2018), the stock fell 50.1%, from Rp5,775 to Rp2,880 - a decline that includes the entire Go-Jek/Go-Car rally and its subsequent unwind: the stock rallied as high as Rp4,880 in September 2017 before giving essentially all of the two-year decline's temporary reprieve back over the two quarters since.
A stock that's now fallen for two consecutive quarters, sitting next to a business whose two-quarter operating-income recovery just broke in the same period - this is the first time since the Go-Jek/Go-Car rally began that price and fundamentals are moving in the same direction. Whether that makes the stock more honestly priced, or simply confirms the market read the fundamentals correctly all along, depends on whether Q1's reversal turns out to be the start of a new decline or a one-quarter stumble - something only the next report can answer.
Target Valuation Range
Enterprise value ~Rp8,198B (~$596M), implying ~18.9x annualized P/E and ~1.45x P/B - the cheapest multiples this site has recorded for Blue Bird - fairly valued to slightly undervalued against a business that just gave back its own two-quarter recovery. The price decline has kept pace with the earnings decline rather than overshooting it in either direction.
Against Q1 2018 numbers (2,502,100,000 shares outstanding, unchanged), using annualized quarterly figures (Q1 2018 × 4) for comparability with prior non-Q4 quarters on this site:
| Market cap → enterprise value | Q1 2018 |
|---|---|
| Share price (period-end) | Rp2,880 |
| Shares outstanding | 2,502,100,000 |
| Market capitalization | ~Rp7,206.0B (~$523.9M) |
| Total liabilities | ~Rp1,607.4B |
| Less: cash and equivalents | ~Rp615.6B |
| Enterprise value | ~Rp8,198B (~$596M) |
Market cap is down 16.8% from ~Rp8,657.3B at Q4 2017's close.
| Peer-multiple sanity check | FY2017 | Q1 2018 (annualized) |
|---|---|---|
| P/E | ~20.4x | ~18.9x (Q1 2018 EPS Rp38 × 4 = Rp152) |
| P/B | ~1.78x | ~1.45x (book value/share ~Rp1,981) |
| Annualized ROE | ~9.0% | ~8.1% |
| Annualized ROA | ~6.1% | ~6.0% |
Every multiple compressed further this quarter, but unlike Q4 2017 - where the price fell faster than the fundamentals, opening up a value case - this quarter the returns also declined, so the compression isn't obviously a bargain forming. An 18.9x annualized P/E and a 1.45x P/B are the cheapest multiples this site has recorded for Blue Bird, but they're now priced against a business whose own quarterly trajectory just reversed, which is a materially different setup from three months ago. A reader weighing this stock needs Q2 2018 to show whether Q1's decline was noise around a still-intact recovery or the recovery's actual end.
PT Blue Bird Tbk's consolidated financial statements as of March 31, 2018 and for the three-month period then ended, authorized for issue April 25, 2018.