Research from SooChow CSSD Capital Markets (Asia), SCCM Asia Research

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Headquartered in Singapore, SooChow CSSD Capital Markets (Asia) is an investment bank focusing on emerging growth companies across Asia, providing a full suite of investment banking services, including corporate finance, mergers and acquisitions advisory, equity capital markets, institutional equities sales and trading and equities research.

SooChow CSSD Capital Markets (Asia)

Equity Bottom-Up

Solusi Sinergi Digital / Equity Bottom-Up

<ul><li>4Q21 performance lifted by year-end sales festivities: <span style="font-size: var(--content-font-size);">4Q21 revenue grew 5.9% QoQ to IDR98.1bn, primarily due to a 7.2x QoQ surge in advertising revenue as eCommerce platforms spent big on OOH media during year-end sales promotions.</span></li></ul><div><div><div><div><ul><li>FO deployment delayed but sales traction grows: As at Dec’21, WIFI’s balance sheet indicates that FO completion is currently at 51% (Sep’21: 30%).</li></ul><div><div><div><div><ul><li>Adjusting projections lower for FY22E with stronger numbers further afield: With stronger-than-expected sales traction, we believe that management could hike ASPs for its managed capacity segment in Jun’22 after the current auction is completed.</li></ul></div></div></div></div></div></div></div></div>

4Q21 performance lifted by year-end sales festivities: 4Q21 revenue grew 5.9% QoQ to IDR98.1bn, primarily due to a 7.2x QoQ surge in advertising revenue as eCommerce platforms spent big on OOH media during year-end sales promotions.FO deployment delayed but sales traction grows: As at Dec’21, WIFI’s balance sheet indicates that FO completion is currently at 51% (Sep’21: 30%).Adjusting projections lower for FY22E with stronger numbers further afield: With stronger-than-expected sales traction, we believe that management could hike ASPs for its managed capacity segment in Jun’22 after the current auction is completed.

PT Solusi Sinergi Digital Tbk - FO Delayed but Sales Traction Growing; Exciting FY22E

<div><div><div><div><ul><li>3Q21 afflicted by Covid-19 lockdowns - 3Q21 revenue declined 16.3% QoQ to IDR92.6bn, primarily due to weakness in revenue from advertising (-85% QoQ), partially mitigated by maiden contributions from its 30%-completed (as at Sep’21) fiber optics network of IDR0.5bn.</li></ul><div><div><div><ul><li>FO deployment delayed - Mgmt. highlighted that the deployment of its fiber optic network has been delayed due to lockdowns across Java Island in early 3Q21 as well as delays in completing field surveys to kick off construction.</li></ul><div><div><div><div><ul><li>Adjusting projections lower for FY21E with stronger numbers further afield</li></ul></div></div></div></div></div></div></div></div></div></div></div>

3Q21 afflicted by Covid-19 lockdowns - 3Q21 revenue declined 16.3% QoQ to IDR92.6bn, primarily due to weakness in revenue from advertising (-85% QoQ), partially mitigated by maiden contributions from its 30%-completed (as at Sep’21) fiber optics network of IDR0.5bn.FO deployment delayed - Mgmt. highlighted that the deployment of its fiber optic network has been delayed due to lockdowns across Java Island in early 3Q21 as well as delays in completing field surveys to kick off construction.Adjusting projections lower for FY21E with stronger numbers further afield

PT Solusi Sinergi Digital (WIFI IJ) - Down but Not Out

<h2>Corporate updates on IJE’s fiber optics network</h2><h3>What’s new:</h3><ul><li>WIFI IJ recently announced 2 corporate updates related to the ongoing deployment of its fiber optics network. These are namely:</li></ul><p>                 i.          Signing of MOU with Lintasarta and Trans Hybrid Communication (THC) for                                     dark fiber utilization, and</p><p>                ii.          Engagement of PT Prasetia Dwidharma and PT Sarida Utama for the                                                   deployment of the network outside the Greater Jakarta region</p><ul><li>The MOUs with Indosat’s Lintasarta and THC is expected to pave the way for both entities to lease dark fiber from WIFI IJ. Based on our discussions with management, there has been indicative demand for 6 cores or c.4.2% of total network capacity</li><li>Management shared that the key deliverables from Prasetia and Sarida are the completion of the FO network outside of the Greater Jakarta region by the end of 2021</li><li>Separately, local media reported that WIFI’s FO subsidiary, IJE had secured an investment credit facility from BBNI IJ to the tune of IDR256.6bn. Details on the facility have not yet been released, but previous discussions with management point to a 5-year tenure with an interest rate of about 9-10% per annum.</li></ul>

Corporate updates on IJE’s fiber optics networkWhat’s new:WIFI IJ recently announced 2 corporate updates related to the ongoing deployment of its fiber optics network. These are namely:                 i.          Signing of MOU with Lintasarta and Trans Hybrid Communication (THC) for                                     dark fiber utilization, and                ii.          Engagement of PT Prasetia Dwidharma and PT Sarida Utama for the                                                   deployment of the network outside the Greater Jakarta regionThe MOUs with Indosat’s Lintasarta and THC is expected to pave the way for both entities to lease dark fiber from WIFI IJ. Based on our discussions with management, there has been indicative demand for 6 cores or c.4.2% of total network capacityManagement shared that the key deliverables from Prasetia and Sarida are the completion of the FO network outside of the Greater Jakarta region by the end of 2021Separately, local media reported that WIFI’s FO subsidiary, IJE had secured an investment credit facility from BBNI IJ to the tune of IDR256.6bn. Details on the facility have not yet been released, but previous discussions with management point to a 5-year tenure with an interest rate of about 9-10% per annum.

Wifi IJ: Corporate Updates on Fiber Optics Network

<h2>Post-Initiation NDR Feedback</h2><p>We hosted a number of non-deal roadshow sessions in the past week across 20 institutional investors and family offices. Interest was high on Solusi Sinergi Digital’s (WIFI) ability to pivot into Fiber Optic (FO) business and growing its Digital Out-Of-Home (DOOH) advertising business. Overall, investors were generally positive on WIFI’s overall business strategies and guidance, as well as massive potential of its FO business. This affirms our belief that WIFI is on the verge of an earnings explosion – 195% EPS CAGR from 2020-24E on our conservative assumptions. Reiterate BUY.</p>

Post-Initiation NDR FeedbackWe hosted a number of non-deal roadshow sessions in the past week across 20 institutional investors and family offices. Interest was high on Solusi Sinergi Digital’s (WIFI) ability to pivot into Fiber Optic (FO) business and growing its Digital Out-Of-Home (DOOH) advertising business. Overall, investors were generally positive on WIFI’s overall business strategies and guidance, as well as massive potential of its FO business. This affirms our belief that WIFI is on the verge of an earnings explosion – 195% EPS CAGR from 2020-24E on our conservative assumptions. Reiterate BUY.

SCCM | PT Solusi Sinergi Digital (WIFI IJ) - Post-Initiation NDR Feedback (BUY; TP IDR1,930/Share)

<h2>No Stop Signs, Nor Speed Limit; On The FO Highway</h2><p><br>Solusi Sinergi Digital (WIFI) is a digital ecosystem company, providing a fiber optic (FO) infrastructure network service alongside ~2,740km of rail tracks across Java Island. WIFI’s two other business pillars, OOH digital advertising and app development, is set to recover from the pandemic effect and cross-benefit from the FO network synergistically. We believe WIFI is able to tap on the latent demand for fixed broadband bandwidth as Indonesia targets to digitalize both urban and rural areas. We forecast EPS to grow by 195% CAGR from FY20-24E; Initiate coverage with a BUY rating and TP of IDR1,930/share.</p>

No Stop Signs, Nor Speed Limit; On The FO Highway Solusi Sinergi Digital (WIFI) is a digital ecosystem company, providing a fiber optic (FO) infrastructure network service alongside ~2,740km of rail tracks across Java Island. WIFI’s two other business pillars, OOH digital advertising and app development, is set to recover from the pandemic effect and cross-benefit from the FO network synergistically. We believe WIFI is able to tap on the latent demand for fixed broadband bandwidth as Indonesia targets to digitalize both urban and rural areas. We forecast EPS to grow by 195% CAGR from FY20-24E; Initiate coverage with a BUY rating and TP of IDR1,930/share.

SCCM | Solusi Sinergi Digital (WIFI IJ; Initiate with BUY)

Indonesia

PT Solusi Sinergi Digital Tbk (SURGE) is an Indonesian digital infrastructure and technology company that operates an integrated digital ecosystem. The company focuses on connectivity infrastructure, digital products and services, and digital media and advertising, including the development and operation of fiber optic infrastructure and mobile applications. It was founded in 2012 and is headquartered in Jakarta, Indonesia.

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Solusi Sinergi Digital (WIFI IJ)

PT Solusi Sinergi Digital Tbk - FO Delayed but Sales Traction Growing; Exciting FY22E

4Q21 performance lifted by year-end sales festivities: 4Q21 revenue grew 5.9% QoQ to IDR98.1bn, primarily due to a 7.2x QoQ surge in advertising...

SCCM Asia Research

PT Solusi Sinergi Digital (WIFI IJ) - Down but Not Out

Down but not out; Looking forward to FY22E; 9M21 Core PATMI of IDR1.8bn (9M20 LATMI: IDR12.1bn) attained just 18% of our FY21E expectations,...

SCCM Asia Research

Wifi IJ: Corporate Updates on Fiber Optics Network

WIFI IJ recently announced 2 corporate updates related to the ongoing deployment of its fiber optics network, Remain constructive on the both FO...

SCCM Asia Research

SCCM | Solusi Sinergi Digital (WIFI IJ; Initiate with BUY)

Solusi Sinergi Digital (WIFI IJ; Initiate with BUY) – No Stop Signs, Nor Speed Limit; On The FO Highway (TP IDR1,930/share; 101% upside)

SCCM Asia Research

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PT Solusi Sinergi Digital Tbk - FO Delayed but Sales Traction Growing; Exciting FY22E

4Q21 performance lifted by year-end sales festivities: 4Q21 revenue grew 5.9% QoQ to IDR98.1bn, primarily due to a 7.2x QoQ surge in advertising...

SCCM Asia Research

PT Solusi Sinergi Digital (WIFI IJ) - Down but Not Out

Down but not out; Looking forward to FY22E; 9M21 Core PATMI of IDR1.8bn (9M20 LATMI: IDR12.1bn) attained just 18% of our FY21E expectations,...

SCCM Asia Research

Wifi IJ: Corporate Updates on Fiber Optics Network

WIFI IJ recently announced 2 corporate updates related to the ongoing deployment of its fiber optics network, Remain constructive on the both FO...

SCCM Asia Research

SCCM | PT Solusi Sinergi Digital (WIFI IJ) - Post-Initiation NDR Feedback (BUY; TP IDR1,930/Share)

Investors were generally positive on WIFI’s overall business strategies and guidance, as well as massive potential of its FO business. We belief...

SCCM Asia Research

SCCM | Solusi Sinergi Digital (WIFI IJ; Initiate with BUY)

Solusi Sinergi Digital (WIFI IJ; Initiate with BUY) – No Stop Signs, Nor Speed Limit; On The FO Highway (TP IDR1,930/share; 101% upside)

SCCM Asia Research