What’s next for Bukalapak after eye-popping IPO?

• Bukalapak.com (IDX: BUKA) share price hits 1,325 rupiah per share
• The major e-commerce player went public last Friday in Jakarta
• Its valuation premium over rivals may be unjustified, says Bloomberg Intelligence
• Analysts on average predict the stock to hit 1,580 rupiah over the next year
• Interested in trading today’s hottest stocks? Open an account with us to get started.

Bukalapak stock price: What’s the latest?

Shares in Bukalapak, the first tech unicorn to list on the Indonesia Stock Exchange (IDX), jumped to 1,275 rupiah as of 14:56 SGT in their second day of trading in Jakarta.

The stock earlier rocketed 25% to 1,325 rupiah in the first few minutes on Monday. The surge triggered the IDX’s daily upper price movement caps, prompting another trading suspension. Trading resumed at around 14:40 SGT, Bloomberg data showed.

So far, the counter is up about 50% from the initial public offering (IPO) price of 850 rupiah.

Last Friday, the shares climbed 25% from the IPO price to close Bukalapak’s first trading session at 1,060 rupiah. The stock had similarly hit the 25% limit just a few minutes after the opening bell.

All three analysts covering BUKA recommended ‘buy’, with an average 12-month target price of 1,580 rupiah, according to Bloomberg data.

Why is Bukalapak’s IPO significant?

The decade-old, loss-making startup raised US$1.5 billion in Indonesia’s largest IPO.

With its eye-popping debut, Bukalapak’s market value swelled to US$7.5 billion, placing it among the country’s 15 biggest firms.

Bukalapak’s backers include China’s Alibaba-affiliated Ant Group, US tech giant Microsoft, British bank Standard Chartered, and Singapore sovereign wealth fund GIC.

The startup upsized its IPO in multiple rounds and received US$6.5 billion worth of interest from institutional and retail investors. The offering’s retail portion was doubled to 5%.

Venture capital firm East Ventures’ co-founder Willson Cuaca expects Bukalapak’s listing to ‘create a snowballing effect and show the path for more Indonesia listings’.

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Is Bukalapak’s ‘rich’ valuation justified?

Although Bukalapak has yet to turn a profit, its revenue grew 26% to US$96 million in 2020. The startup’s net loss amounted to US$90.4 million last year. Registered users totalled 105 million.

Bukalapak works with seven million agents - primarily street kiosks and mum-and-pop shops - which it connects to distributors of consumer goods.

Investors see it as a vehicle for tapping into Indonesia’s thriving e-commerce market, Nikkei reported.

In July, Bloomberg Intelligence (BI) analysts opined that Bukalapak’s market share in Indonesia’s e-commerce space could not justify its ‘rich’ valuation premium over bigger rivals Tokopedia and Alibaba-owned Lazada.

Bukalapak captured about 7.5% of Indonesia’s e-commerce gross merchandise value (GMV) last year, according to BI’s calculations.

BI said the IPO at a US$5.60 valuation implies an enterprise value (EV) to forward GMV ratio of 1.5x, higher than the 0.5x multiple for Tokopedia, which has at least thrice the GMV and web visits.

Meanwhile, UBS head of global banking for Southeast Asia and India, Nicolo Magni, said Bukalapak’s IPO ‘demonstrated that Southeast Asia technology companies can achieve a premium valuation for growth with significant demand’.