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Bisnis.com, JAKARTA - The shares of Telkom (IDX: TLKM), Indonesia’s biggest internet provider, have a reputation as a lucrative investment option whenever the window dressing momentum arrives. However, this historical record has the potential to be broken this year.
In today's trading, Tuesday (6/12/2022), Telkom shares weakened to the lowest auto-rejection level (auto-rejection bawah/ARB) price. Closing at IDR 3,600 per share, this decline also worsened the trend of cutting prices by 10.89 per cent month-to-date (MTD); from IDR 4,040 per share at the end of November.
Throughout the day, many public investors sold Telkom's shares at the average price of Rp 3,625.4 per share. In the regular market, foreign investors sold approximately IDR 275.3 billion of Telkom shares daily, bringing the total foreign net sell since the beginning of the month to IDR 772.3 billion.
The sluggish phenomenon in December, a month famously known as window dressing, is something rare for Telkom. Telkom's share price has continually strengthened in eight previous editions of window dressing.
The last time the shares of this state-owned entity experienced an accumulation of weakness throughout December was in 2013, while the most significant increase occurred in 2017. Meanwhile, Telkom's share price increased by 1.35 per cent throughout the previous edition of window dressing.
Various speculations have been suspected of being the culprit. According to analysts, one of them is Telkom's position as a strategic investor in PT GoTo Gojek Tokopedia Tbk. (IDX: GOTO).
GoTo, the largest ride-hailing and e-commerce company in Indonesia, is indeed experiencing a battered market capitalisation. The company's "pre-IPO investors" lock-up has been open since last week, and there are indications that it has sparked massive divestment actions from fund managers across the world.
For Telkom, this condition is terrible news. Although they repeatedly claimed that the purpose of their long-term investment in GoTo is not to target capital gains, this decline can still cause Telkom to experience a decrease in its investment value.
"Telkom's share price is under pressure following the news that local authorities can submit an investigation into the benefits of [Telkom's] investment in GoTo," the CLSA Sekuritas Research Team wrote in a note to Bisnis.
For the record, Telkom reports that its investment value in GoTo was made at the latest average price of IDR 246 per share. As of Tuesday (6/12), GoTo shares have fallen to IDR 115 per share. It means the estimated floating loss of the state-owned entity has touched 53.25 per cent. It is assumed that the investment is made in the capital range of Rp. 6.4 trillion means that the current floating loss is equivalent to IDR 2.99 trillion.
Even though they tend to believe that a decrease in GoTo's capitalisation triggers current share pressure, the CLSA Sekuritas Research Team still believes that the impact on Telkom loyalty is likely to be minimal. This is because the loss in investment value is not included in consideration of Telkom's dividend amount.
“Telkom intends to retain its investment in GoTo and reiterate that dividend payments will be based on core earnings. In addition, the dividend per share should still be higher than last year because the capital requirement for the data centre has disappeared.”
However, this temporary pressure can also reduce Telkom's profit opportunities until the window dressing end. Regardless of the effect, the decline in investment value will still affect the headline profitability of Telkom.
The CLSA Research Team’s views align with the assessment of CGS-CIMB Securities analyst Fanny Suherman.
With the worst-case scenario, if GoTo's share price continues to fall, Telkom could suffer an investment loss equivalent to 9 to 10 per cent of its 9-month performance earlier this year. However, Fanny also reminded us that, in the end, Telkom's prospects would also depend on the investment objectives of each investor.
"So if you say the effect is significant or not? Yes, significant. But again, we can't just look at the investment. We have to look at how in the future, will [Telkom's network business performance] be better?” She said.
So far, the condition of "being dragged into the GoTo vortex" is not only experienced by Telkom.
PT Astra International Tbk (IDX: ASII), another company that put their investment in GoTo shares, has also experienced a market capitalisation decline since the month's beginning. It's just that the pressure that hit Astra relatively moderate. There are indications that this is due to the cheaper investment purchases made by the William Soeryadjaya startup.
Meanwhile, if referring to the Bloomberg analyst consensus, Telkom's shares still received a positive rating despite the weakening of the last few days. Of the 40 analysts covering this issuer, 34 (85 per cent) pinned a "buy" rating.
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Disclaimer: This article is an english translation from "Kala Saham Telkom (TLKM) Digoyang Nestapa GOTO." You can read the original version in Bahasa Indonesia by visiting this link.
