DNET The Indomaret Stake Trading at 76 Times Earnings on Almost No Volume

The 40% Stake That Actually Runs the Show

PT Indoritel Makmur Internasional Tbk is a pure holding company: it owns a controlling stake in one fiber-optic subsidiary and minority stakes in three of Indonesia's best-known consumer brands, and reports almost nothing else. Its controlling shareholders as of this filing are Hannawell Group Limited (39.35%), PT Megah Eraharja (27.82%), and Anthoni Salim individually (25.30%) — Salim Group entities, not the Djoko Susanto family that controls rival chain Alfamart. Through Salim-linked vehicles, the Company holds 40% of PT Indomarco Prismatama (which operates the "Indomaret" minimarket chain), 35.84% of PT Fast Food Indonesia Tbk (the sole KFC franchisee in Indonesia), and 25.77% of PT Nippon Indosari Corpindo Tbk ("Sari Roti"). None of those three are consolidated — they're booked under the equity method^», meaning only a single "share of profit" line shows up in the P&L, not their actual revenue or debt. The one business the Company does consolidate is FiberStar (98.09% owned, via subsidiary PT Mega Akses Persada), a fiber-optic network operator.

This is the Company's fiscal year 2019 annual report (period ended December 31, 2019, audited report dated May 27, 2020). The tension worth tracking here isn't FiberStar's growth — it's that the Company's own consolidated business generated Rp257.8 billion of revenue in 2019, while its share of profit from the three associates alone was Rp675.7 billion, more than 2.6 times bigger. The stakes that management doesn't operationally control are what actually determine whether this stock is worth owning.

The Prescription

FiberStar is the one lever the Company genuinely controls, and 2019 shows it working: revenue nearly doubled (+98.63%) on real network buildout — Home Passed^» coverage grew 70.85% and fiber length grew 41.24% to 17,661 km. Management's own 2020 marketing plan, focused on selling IP Transit, International Ethernet Private Line, and International Private Lease Circuit to banks, financial institutions, and telcos, is the right instinct — that's where FiberStar earns a real enterprise contract, not a retail subscriber it has to keep discounting to acquire. The Company should keep funding this buildout aggressively, since it's the only part of the business where management's own decisions (not an associate's board) drive the outcome.

What it should stop doing: continuing to operate OgahRugi, the e-Commerce Daily Deals segment, as if it were a real business line. It generated Rp26.8 million of revenue in 2019 — 0.01% of the Company's total — against a fiber-optic segment more than 9,000 times its size (see Beyond the Usual). A segment that small isn't a growth bet anymore; it's a reporting obligation nobody has bothered to close out. Winding it down (or selling the OgahRugi brand outright) would remove a line item that adds no value and mildly clutters every segment disclosure going forward.

A Steady Climb the Market Barely Noticed

DNET's share price rose from Rp2,250 (January 2018) to a 2019 close of Rp3,070 — a 36% two-year gain, with a peak of Rp3,320 in October 2018 (a ~48% rise from the January 2018 low before pulling back and flattening through 2019). That's a meaningful move, but it happened on trading volume of only 226,000 to 2 million shares per quarter against 14.18 billion shares outstanding — the price moved, but almost nobody actually transacted at it (see Target Valuation Range for why that matters).

Key Financial Metrics

FY 2019 vs. FY 2018, consolidated

FX: IDR 13,901 = USD 1 (December 31, 2019 rate, per the Company's own MD&A).

Metric	FY 2019 (IDR)	FY 2019 (USD)	FY 2018 (IDR)	YoY
Revenue	Rp257.798B	~$18.55M	Rp129.789B	✅ +98.63%
Share of profit of associates	Rp675.692B	~$48.61M	Rp423.248B	✅ +59.64%
Operating Income»	Rp575.641B	~$41.41M	Rp323.938B	✅ +77.72%
Net Income»	Rp519.144B	~$37.35M	Rp282.868B	✅ +83.53%
Net income attributable to owners	Rp523.050B	~$37.63M	Rp289.411B	✅ +80.72%
Total comprehensive income	Rp408.703B	~$29.40M	Rp448.001B	⚠️ -8.77%
EPS	Rp36.88	~$0.00265	Rp20.40	✅ +80.78%

Balance sheet / cash flow	FY 2019 (IDR)	FY 2019 (USD)	FY 2018 (IDR)	YoY
Total Assets	Rp15,484.343B	~$1.114B	Rp14,527.984B	✅ +6.58%
Total Liabilities	Rp5,949.260B	~$428.0M	Rp5,489.149B	⚠️ +8.38%
Total Equity	Rp9,535.082B	~$685.9M	Rp9,038.835B	✅ +5.49%
Cash and cash equivalents	Rp158.254B	~$11.38M	Rp342.283B	⚠️ -53.77%
Operating cash flow	-Rp531.706B	~-$38.25M	-Rp294.354B	⚠️ Use worsened
Free Cash Flow» (op. cash flow - capex)	~-Rp1,054.522B	~-$75.86M	~-Rp682.760B	⚠️ Use worsened

"Adjusted EBITDA^»" isn't a metric this Company reports, and it doesn't map cleanly onto a pure holding company's accounts anyway — Operating Income above already embeds Rp675.7 billion of non-cash equity-method profit from associates, so an EBITDA add-back would double-count that pass-through rather than isolate FiberStar's own cash earnings. Net Income and the cash flow statement are the honest lens here instead.

Net income rose 83.5% and revenue nearly doubled, but two things sit underneath that headline. First, comprehensive income actually fell 8.77% — the gap is explained almost entirely by a Rp109.5 billion negative swing in the Company's share of its associates' own other comprehensive income (their own employee-benefit actuarial remeasurement losses, flowing through under the equity method), not anything the Company itself did. Second, operating cash flow was negative Rp531.7 billion, worse than 2018, driven mainly by Rp526.5 billion of interest paid on bank loans — a holding company whose own cash is being drained by debt service even as its reported profit triples.

Two Segments, One That Doesn't Count

The Company reports two consolidated operating segments: Fiber Optic (FiberStar) and e-Commerce Daily Deals (OgahRugi).

Segment	2019 Revenue	2018 Revenue	YoY	% of Total
Fiber Optic (FiberStar)	Rp257.771B	Rp129.722B	✅ +98.71%	99.99%
e-Commerce Daily Deals (OgahRugi)	Rp0.0268B	Rp0.0673B	⚠️ -60.2%	0.01%
Total	Rp257.798B	Rp129.789B	+98.63%	100%

FiberStar is the entire consolidated business in any measure that matters. It closed 2019 present in 17 provinces and 103 cities/regencies, serving customers through 114 Internet Service Provider partners and 129 property-developer/non-ISP partners, with 451,266 Home Passed (+70.85% YoY) against 17,661 km of deployed fiber (+41.24% YoY). Two customers — PT Cyberindo Aditama and PT XL Axiata Tbk — together accounted for 55.1% of total revenue in 2019, concentration worth watching if either relationship weakens. OgahRugi, by contrast, sold effectively nothing (see Beyond the Usual for how small).

Key Operational Metrics

• FiberStar Home Passed^»: 451,266 (2019) vs. 264,135 (2018), ✅ +70.85%
• FiberStar fiber-optic length: 17,661 km vs. 12,504 km, ✅ +41.24%
• FiberStar city/regency coverage: 103 vs. 92, ✅ +11.96%
• FiberStar ISP partners: 114; property-developer/non-ISP partners: 129
• Trade receivables collectability: improved to 170 days outstanding (2019) from 200 days (2018)
• Ownership stakes (equity-method associates): Indomarco Prismatama (Indomaret) 40%, Fast Food Indonesia (KFC) 35.84%, Nippon Indosari Corpindo (Sari Roti) 25.77%
• FiberStar consolidation: 98.09% total ownership (93.21% direct, 4.88% indirect via subsidiary IPN)
• Not available this quarter: a standalone ARPU or take rate for FiberStar's retail vs. corporate customer mix, and any subscriber/take-up rate against the 451,266 Home Passed figure — neither was disclosed in this filing.

Beyond the Usual

The crown-jewel stakes are also the bank's collateral

The Company's Rp4.4 trillion Special Transaction Loan from PT Bank Mandiri (Persero) Tbk is secured by a pledge of its own shares in Indomarco Prismatama (Indomaret), Nippon Indosari Corpindo (Sari Roti), and Fast Food Indonesia (KFC) — the same three equity stakes that generate effectively all of the Company's reported profit. The loan agreement requires the Company to maintain minimum debt-service coverage and a maximum leverage ratio, both of which management states were met as of December 31, 2019. Pledging associate stakes as loan collateral is standard practice for a holding company structured this way, but it means the entities providing the profit and the entity holding the debt aren't separated — a covenant breach would put a direct claim path on the stakes that make up nearly all of the Company's value.

Net income up 84%, comprehensive income down 9% — and it isn't the Company's own doing

Net income rose 83.53% YoY to Rp519.1 billion, but total comprehensive income fell 8.77% to Rp408.7 billion. The roughly Rp110.4 billion gap between the two is driven almost entirely by a Rp109.5 billion negative swing in the Company's share of its associates' own other comprehensive income — their own actuarial losses on employee-benefit obligations, following a change in discount-rate assumptions, flowing through to the Company under equity-method accounting. It's a real, disclosed number, not a manipulated one, but a reader relying on comprehensive income alone would conclude the year was weaker than the underlying net income actually shows.

OgahRugi's e-commerce segment generated Rp26,784,319 of revenue in 2019 — 0.01% of the Company's total Rp257.8 billion, against Rp252,987,506,817 from the Fiber Optic segment (plus a further Rp4.78 billion of related-party fiber revenue from FiberStar's own affiliate). It's still formally reported as one of the Group's two official operating segments in the segment footnote, alongside a business more than 9,000 times its size.

Rp4.244 trillion — 27% of total assets — sits in discretionary fund management contracts ("Kontrak Pengelolaan Dana") with two third parties, PT Nikko Securities Indonesia and PT Net Assets Management, rather than in plain bank deposits. These contracts generated Rp497.8 billion of finance income in 2019 alone — more than double the Company's own Rp257.8 billion of fiber-optic revenue, and nearly the size of its reported net income. For a company whose headline numbers are dominated by an operating subsidiary and three associates, a fifth of its balance sheet quietly earning outsized returns through two external fund managers is a detail a reader wouldn't get from the earnings highlights alone.

The Company's own operating cash flow was negative Rp531.7 billion in 2019 (worse than negative Rp294.4 billion in 2018), driven mainly by Rp526.5 billion of interest paid on its bank loans. Combined with Rp522.8 billion of capital expenditure, free cash flow was roughly negative Rp1.05 trillion for the year — funded by Rp691.1 billion of net new borrowing, even as reported net income rose 83.5%. A profit statement showing 84% growth and a cash flow statement showing the business burning more cash than the year before are both true at once here.

Checked and found nothing further notable this quarter: the Company states it and all members of management were not involved in any legal cases or administrative sanctions as of December 31, 2019, and related-party revenue (Rp4.78 billion from Indomarco Prismatama, network rental) was a small and transparently disclosed 1.86% of total revenue.

Target Valuation Range

Bottom line: rich on any conventional measure, and the likely explanation is a stock almost nobody trades rather than a stock the market has genuinely priced. A sum-of-the-parts read using market prices for the two listed associate stakes still leaves a gap versus the Company's own market capitalization too large to explain through fundamentals alone.

The Company's shares closed 2019 at Rp3,070 (December 30, 2019 close on the Indonesia Stock Exchange). No stock split has occurred for this ticker since this filing, so this price is directly comparable to the Company's own historical reporting, not a retroactively adjusted figure.

Market cap → book value	FY2019 (period-end)
Share price (period-end)	Rp3,070
Shares outstanding	14,184,000,000
Market capitalization	~Rp43.545 trillion (~$3.13 billion)
Total equity	Rp9,535.082 billion
Book value per share	Rp672
P/B»	~4.6x
FY2019 basic EPS	Rp36.88
P/E»	~83.2x

Sum-of-the-parts sanity check	Value
Fast Food Indonesia (KFC) stake, at market	~Rp1.823 trillion
Nippon Indosari Corpindo (Sari Roti) stake, at market	~Rp2.073 trillion
Indomaret stake, equity-method book value (verifiable floor)	~Rp4.597 trillion
Non-associate net assets	~Rp0.289 trillion
Sum of the above	~Rp8.78 trillion
Company's market capitalization	Rp43.545 trillion
Implied value of 40% Indomaret stake	~Rp39.4 trillion
Implied value of all of Indomaret	~Rp98.4 trillion (~76x Indomaret's own FY2019 net income)

This is the first quarter of coverage for this ticker, so there's no prior-quarter column to compare against yet. The P/E and implied-Indomaret multiples are very rich for a holding company - a strikingly rich implied multiple for a minimarket chain to be trading at, even a well-run one - and worth treating skeptically given the float below. Only 7.53% of shares are held by the public, and quarterly trading volume through 2019 ranged from 226,000 to just under 2 million shares against 14.18 billion outstanding - under 0.02% of shares changing hands in a typical quarter. A closing price set by that little actual trading is a weak signal of fair value, which is the more parsimonious explanation for the P/E and implied-Indomaret-multiple gap above than assuming the market has done real fundamental work on an unlisted subsidiary's intrinsic worth.

A full discounted cash flow model isn't attempted here — this is the first quarter of coverage for this ticker, and a holding company's fair value ultimately depends on three underlying operating businesses' own multi-year trajectories, none of which can be responsibly projected from a single annual report. The sum-of-the-parts and reverse-valuation reads above are the honest lens for this filing; a full DCF becomes worth building once FiberStar, Indomaret, KFC, and Sari Roti each have more history in this backfill. Until the float actually widens, an implied 76x on an unlisted minimarket chain says less about what Indomaret is worth than about how few people ever have to agree on a price.

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