BUKALAPAK x SALIM: Planning for Indo-Pacific Domination (+China!)
BUKA has a <Net Cash-to-Market Cap ratio of 80%>, after its share price fell by -74.1% in 1.5 years... does this make its shares undervalued yet? And what is BUKA doing in The Philippines?? [Part 3]
Readers who have been following my Bukalapak (BUKA) thesis over the previous 2 reports will have read through a tale rivalling the Epic of Gilgamesh — complete with fanciful protagonists like warungs, Overseas Chinese, tycoons, Presidents, nation-builders, and colonists. However, what actually drew my attention to BUKA in the first place wasn’t any of these — it was the fact that BUKA held >80% of its market cap in Net Cash on its balance sheet.
The reason why BUKA is holding so much cash relative to its market cap is because the company listed in Aug 2021 — just two months before the Tech bubble popped in Oct 2021. Since then, the company’s share price has taken a dive into the abyss — no doubt exacerbated recently by the unrelated and precipitous -50% slide of Indonesian e-commerce company GoTo’s share price over the past month, due to the expiry of a lock-up period for shareholders. While this is certainly bad news for those who acquired BUKA’s shares at the point of listing… could it spell opportunity for new BUKA shareholders?
In this Part 3 report, we’re going to continue where we left off in Part 2 with the Overseas Chinese tycoons — by exploring the organizational structure of the storied Salim Group conglomerate. Here we’ll see what the other lines of businesses of the Salim Group are (e.g. Indomie) — which will lend further color towards the contribution that the other businesses of the Salim Group could potentially provide towards BUKA in the warung economy. We will also be exploring the relationship between Indonesian politics & business — which may provide useful context regarding the differences in the Indonesian business environment vs. more developed markets to investors living outside of Indonesia.
However, the meat of this report will lie in the International & Geopolitical section of this report. Astute investors & analysts will already be aware that BUKA has started taking its first steps into the Philippines as of 3Q22 — where a warung economy of similar size also exists, or at least one with just as much potential. It is here that we will see why the Overseas Chinese tycoon network that the Salim Group is part of is so significant to BUKA’s future. Finally, we’ll cap this 3-piece BUKA report by exploring its valuation in the Financial Analysis & Valuation section.
Mitra Bukalapak’s website (O2O market)
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Salim Group Organizational Structure
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