Bukalapak shares fall despite 35% first half revenue jump

Indonesian online retailer Bukalapak trimmed its losses in the first half of the year as pandemic restrictions continued to provide a tailwind for the e-commerce sector. (Photo by Ken Kobayashi)

SHOTARO TANI, Nikkei staff writer | Indonesia

TOKYO — Shares in Bukalapak, one of the largest e-commerce platforms in Indonesia, fell on Wednesday despite the company posting a 35% jump in revenue for the first half of the year.

Bukalapak shares ended Wednesday’s trading at 890 rupiah, down 5.8% on the day. The fall came despite the company booking revenue of 863 billion rupiah ($60.5 million) for the six months ended June, up 34.6% from the previous year, as announced in financial results released on Tuesday. This was Bukalapak’s first earnings announcement since going public on the Indonesia Stock Exchange in early August.

Revenue from its Mitra Bukalapak service, which helps mom and pop shops — warung in local parlance — digitize, was the main source of growth, rocketing 349.6% on the year in the first half.

The Mitra service now accounts for 33.5% of Bukalapak’s overall revenue, up from 10% a year ago, a sign that the company is doubling down on offline retail amid cutthroat competition in the Indonesian e-commerce market.

“We believe that in terms of the competitive strength, [Bukalapak’s rivals] have been relying a lot more on aggressive capital strategy,” said Teddy Oetomo, president of Bukalapak, in the earnings call on Tuesday. “Fortunately for us, this Mitra segment is where [deploying] capital is not that effective. This is not a space where you can just come in and just make a significant amount of discounts or selling beyond the price set by the FMCG providers, at least not for an extended period.

“As a result this is a game of racing to improve the value add, rather than capital gain. This is where our lead of three years plus has been instrumental because we have a wider, much [more] complete offering in terms of allowing mom and pop shops to make more money,” he added.

Crucially, Bukalapak has been able to trim its net losses. It posted a net loss of 766 billion rupiah for the six-month period, a decline of 25% compared with the same period last year. Oetomo said that the company will “hopefully” achieve a positive EBITDA on a full-year basis by 2023. EBITDA is earnings before interest, taxes, depreciation and amortization. Bukalapak had a negative EBITDA of 694 billion rupiah in the first half of 2021.

The smaller net loss should have cheered investors, but it was not enough to reverse the lackluster share price performance by the company. Bukalapak’s closing price of 890 rupiah on Wednesday is 19.8% lower than its highest closing price, which it logged on the second day of trading on Aug. 9. Its share price had at one point dropped to 775 rupiah in mid-August, well below the IPO price of 850 rupiah.

Still, Bukalapak is the 16th-largest listed company in Indonesia, with a market capitalization of 97 trillion rupiah.

In its earnings presentation, the company also said it had fully acquired Five Jack, a company that runs a marketplace for virtual items on digital games.

“The gaming industry in Indonesia is large and growing, with a consumer-to-consumer segment that is still predominantly unorganized,” the company said in the presentation. The marketplace “has grown rapidly, and is currently profitable,” and there are “significant synergy opportunities to cross-sell [the marketplace’s] wide range of [products] to Bukalapak’s user base,” it said.

On the acquisition, Oetomo said in the earnings call that the company was building towards having “several marketplaces that acts as specialty markets” and that “if things go well, in the future, hopefully you will see Bukalapak own a group of marketplaces.”

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