The GoTo Group (JK:GOTO), the Indonesian superapp operator, saw a solid bump in its share price on its debut on Monday in Jakarta. The shares jumped 23.1% at the open on the Indonesia Stock Exchange, but quickly settled back, and stabilized to close at a 13.0% first-day gain.
I'm highlighting GoTo as Asia's most-exciting new stock offering, and one to watch for the rest of the year. I went into some of my logic in a column last Wednesday. U.S. investors would want to track the company even if they can't access Southeast Asian stocks directly, since GoTo has also indicated a desire to list in New York.
GoTo is a "unicorn with two horns," the product of two successful tech startups: ride-hailing specialist Gojek agreed to merge last May with the e-commerce website Tokopedia. Its initial public offering is the largest in Southeast Asia to date this year, and the fifth-largest in the world.
The company, full name GoTo Gokjek Tokopedia, is a giant in Southeast Asia's largest economy, able to serve two-thirds of Indonesian household consumption needs, according to data from RedSeer. Tokopedia is the top e-commerce site in the country, with 37.6% share of traffic as of March 2022, according to SimilarWeb.
So it's a great point of entry into the world's fourth-largest nation, and Indonesia's 274 million population. There's the kicker that GoTo also operates in Singapore and Vietnam, with aspirations on the rest of Southeast Asia, a region of 655 million souls.
The first-day trading is a strong start. But it also indicates that the offering was reasonably sized and priced. Bankers didn't leave a crazy amount of money on the table that the company could have recouped. GoTo downsized the initial public offering, and listed at 338 rupiah per share, near but not at the top of its 316-346 rupiah range. It ended the day at 382 rupiah.
Investors will be cautious of the large losses seen in the shares of similar Southeast Asian tech plays. Smaller e-commerce rival Bukalapak (JK:BUKA) benefitted from a 24.7% first-day bounce when it listed last August, as I explained at the time, but has seen since its stock plummet 69.1%.
Bukalapak is experiencing management churn as its CEO left for the government, and is struggling for market share in a segment dominated by Tokopedia and Singapore-based rival Shopee. But Bukalapak also priced its offering at the height of its range, and sold a chunkier US$1.5 billion in shares, while Tokopedia parent GoTo has raised US$1.1 billion.
At listing, that gave GoTo a market capitalization of US$28 billion, or US$32 billion by the day's end. It's instantly the third-largest public company in Indonesia, behind only Bank Central Asia (PBCRY) (JK:BBCA) (US$66.3 billion market cap) and Bank Rakyat Indonesia (BKRKY) (JK:BBRI) (US$48.8 billion), and narrowly ahead of Telkom Indonesia (TLK) (JK:TLKM) (US$31.5 billion). But established banks and telecoms are hardly stocks to get the pulse racing.
Tokopedia is the top dog in Indonesian e-commerce. It is winning a hard-fought battle with Shopee, a subsidiary of Singapore-based Sea (SE) , with 37.6% clickshare of e-commerce traffic for Tokopedia as of March 2022 to the 30.2% at Shopee, again according to SimilarWeb data. The Alibaba Group Holding (BABA) (HK:9988) subsidiary Lazada is a distant third, with 5.6% clickshare, while Bukalapak has been losing ground and has seen 7% market share fall to 5.1%.
GoTo issued 46.7 billion new Series A shares for the offering. It says it will use the proceeds to fund growth. It wants to boost the number of consumers it serves, increase engagement, deliver more "hyperlocal" service across Indonesia's 17,000 islands, and offer loyalty rewards. Investments in tech, infrastructure and electric vehicles should also help it expand in Singapore and Vietnam, the company believes.
Investors have an eight-month lockup for GoTo's A shares, or two years if they hold the insider Class B shares. GoTo is the first company to go public under new rules in Indonesia allowing unequal voting rights.
Gojek launched in 2010, taking its name from the Bahasa Indonesia word ojek, which originally meant "to moonlight" but became the term for a motorcycle taxi. It has expanded into Uber-like car service, as well as food delivery and courier service. A toko, meanwhile, is Indonesian for a small store, the inspiration for the birth of Tokopedia in 2009.
GoTo has also expanded into mobile payments and e-wallets, targeting the 55.5% of the Indonesian public who either don't have a bank account or don't have proper bank access through an investment into the digital Bank Jago. That allows GoTo to offer a digital wallet and a buy-now-pay-later microcredit service in conjunction, as well as a financial-management system for small businesses.
As a combined entity, GoTo serves 55 million transacting customers over the course of a year, with a network of 2.5 million drivers and 14 million merchants selling goods through its sites.
It's been a scramble for market share that is seeing GoTo, Shopee parent Sea, Bukalapak and Singapore-based ride-hailing rival Grab (GRAB) all losing money. They are under pressure to start converting the clicks to profitable cash.
Indonesia was the only Southeast Asian market to move higher on Monday, although it too lost ground at the close. The benchmark Jakarta Composite Index ended slightly into the red, ending down 0.1%.
It was still the top-performing market in Southeast Asia, substantially outdoing the Straits Times Index in Singapore, the regional financial capital, which closed down 0.6%. In fact, Indonesian equities have been outperforming for the last year, posting a gain of 24.8% since mid-May 2021.
Asian equities are generally heading south on Monday, led by mainland China's CSI 300 index, which dropped 3.1% as a Covid-19 outbreak continues to surge. In Hong Kong, the Hang Seng Index fell 3.0%.
China posted a record 27,595 new Covid cases on Monday, with fresh high-water marks set every day in the last week. Infections started soaring in mid-March as the Omicron variant spread fast, leading to large swathes of the country locking down.
Shanghai, the largest city in China, has been locked down for two weeks, and some of the 26 million residents say they're struggling for food. Despite still posting record numbers of new cases, the city says it will start easing the lockdown and has divided the city into sections: 7,624 areas are still sealed off; 7,565 "prevention areas" will open up if they have no positive cases for two weeks; and 2,460 areas are now subject to "controls" after a week free of new infections.
It appears to be a concession that the zero-Covid strategy still deployed in China is failing in the face of the highly transmissible Omicron variant. Chinese authorities say they are pursuing a "dynamic zero" strategy of targeted lockdowns, but Nomura estimates 23 cities and 22% of the economy is now in some form of shutdown.
