Bareksa.com - We maintain the expansion assumption of 2.500 vehicles in 2014F/2015F. We are optimistic as expansion in 2013 of 2.000 vehicles met both our forecast and the Company’s. TAXI’s fleet size by the end of December 2013 is 10.029 regular taxis. Additionally, in January 2014 the Daily Fix Fee (DFF) of drivers was increased by only +2% to Rp240.000. The adjustment of DFF increases the Regular Taxi Revenue forecast in 2014F/2015F by +2.13%/+2.15%.

We are now more realistic towards the Company’s Other Revenue (advertising derived) in 2014F/2015F. Our Other Revenue forecast is proved too optimistic as 9M13 figure of Other Revenue only formed 30.6% of our forecast. Thus we are adjusting Other Revenue down by -60%/ -60% in 2014F/2015F respectively. Other Revenue contributes 0.42%/0.34% to total Revenue in 2014F/2015F.

The increase in Daily Fix Fee pushed our forecasted total Revenue by +1.95%/+1.97% in 2014F/2015F. Conversely, as we are grinding out Other Revenue forecast, it trims the increase of total revenue down to +1.32%/+1.45% in 2014F/2015F respectively. Going forward, we maintain our other assumptions such as the increase in fleet and an updated Daily Fix Fee of Rp 240.000 in 2014F/2015F thus our forecast are only slightly adjusted upwards.

We reiterate our BUY recommendation on TAXI with a target price of Rp 2.300. TAXI is currently is trading at Rp 1.785. Wednesday 12 February 2014’s closing price reflects 19.82x FY14F P/E and 15.86x FY15F P/E. Hence, we recommend BUY on a new Rp 2,300 price target, with a 28.9% upside from current price. We continue to like TAXI as it is positioned second in the regular taxi market and its highly viewed unique business model.

Sources: Buana Research

Rigorous Revenue Growth

We forecast that TAXI’s Revenue will grow +24% CAGR in 2013F to 2016F (previous forecast +23% CAGR). This increase is supported by their inline regular taxi fleet expansion in 2013 of 2.000 vehicles. Thus looking forward, our assumption of additional 2.500 vehicles in 2014F/2015F remains the same. Additionally, the Daily Fix Fee of each driver was increased 2% in January 2014 to Rp240.000 from previously Rp235.000. All that put together will push the Company’s Revenue in the future.

Exhibit 2 compares the number of targeted fleet that TAXI will manage by 2016F in relations to our forecasted Revenue. Growing armada means Regular Taxi derived Revenue increases as well. As the number of taxis increases, the number of driver that has to put in the Daily Fix Fee adds up. This translates to higher Revenue. The new assumption of Daily Fix Fee of each taxi is now at Rp240.000 (+2% adjustment in January 2014).

The management plans for an aggressive expansion of their armada. In 2013, they have added 2.000 regular taxis which is in line with their target. Looking forward, the Company is planning to add another 2.500 vehicles in both 2014F/2015F. We expect that Regular Taxi Revenue will go up to Rp697 billion or +43.9% YoY in 2013F, contributing 92%/93% in 2014F/2015F. For the other three segments, we forecast that they will grow at a rate of 10% to 13% YoY in 2013F.

According to our forecast, it is shown in Exhibit 4 that Revenue is forecasted to grow at 27% CAGR and Net Profit is at 37% CAGR, both in the period of 2012- 2016F. It is possible for Net Profit to grow higher due to the cost the Company has to deal with. The drivers bear direct costs which are fuel price fluctuations, maintenance and spare parts costs. Those costs are more volatile. Whereas with the Partnership Scheme, TAXI bears three costs namely; Interest Expense, Depreciation and Labor Cost (operational). The Company’s is exposed to the more predictable costs items. This enables the Management to act on it much more promptly.

*Andre Maningkas is Analyst of PT Buana Capital. This article is part of the Equity Research of PT Buana Capital