November 17, 2024
AI: Your New BFF for a Simple Life

Market Commentary
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 See the image above?

Yep, I created that using ChatGPT with a simple prompt: "Please make a picture with a title AI: Your New BFF for a Simple Life"

Pretty cool, right? It’s amazing how things have become so much easier and more efficient with the help of AI.

This perfectly aligns with what Jensen Huang, CEO of Nvidia, shared at Indonesia AI Day 2024 just this past Thursday. Dressed in his iconic black jacket, Huang captivating the audience with his vision for the future of AI.

 


With a relaxed yet charismatic demeanor, Jensen Huang shared his insights in front of hundreds of attendees. He emphasized that Indonesia has tremendous potential to develop AI.

We are at the beginning of a new era
AI opens up huge opportunities, especially since it’s an emerging industry that can change the way we live and work

However, Huang didn't just focus on the opportunities. He also stressed the importance of responsibility.

In his view, AI development in Indonesia needs to be done wisely so that its benefits can reach many people.

Looking ahead, data will become the most valuable asset, and infrastructure like cloud computing will be the key foundation.

This momentum of digital transformation and AI adoption in Indonesia has significantly boosted the performance of companies like MTDL.

The company showcased its impressive performance in 3Q24, reporting a net profit of IDR 179 bn, marking a 38% yoy growth.
 


This achievement was largely driven by a surge in revenue from the distribution segment, reaching IDR 5.3 tn, a 25% increase yoy.

In addition, MTDL successfully implemented significant cost efficiencies. Selling, general, and administrative expenses were reduced to IDR 180 bn, down 16% yoy. 

These efficiency measures helped boost the operating margin to 5.18%, up 50 bps yoy.


 


These successes reflect MTDL's strategy of focusing on diversifying its cloud and digital services products, while also optimizing its extensive distribution network across Indonesia.

The company has also been actively expanding strategic partnerships with global tech leaders like Microsoft Azure and Amazon Web Services (AWS) to strengthen its service portfolio.

MTDL continues to expand its digital ecosystem with bold strategic moves. One significant step is forming a joint venture with FPT Information System (FPT IS), resulting in a new entity called PT FPT Metrodata Indonesia (FMI).

This joint venture is set to officially launch in November 2024, focusing on three strategic areas: Cybersecurity, AI and Cloud GPU Services, and Software Development.

A key highlight is the AI-based cloud GPU service powered by NVIDIA technology.

As an official NVIDIA service partner, FPT IS enables FMI to deliver highly efficient AI solutions, particularly for companies needing high-performance computing for big data analytics, machine learning, and AI model development.

According to projections, FMI is expected to generate USD 100 mn in revenue over the next five years, driven by the rising adoption of AI and cloud solutions in Indonesia.
 


Currently, AI contributes around 7% of MTDL’s total orders, but the growth potential is substantial.

This is fueled by exponential growth in the segment, especially as Indonesia accelerates its digital transformation across various industries.

With this strategic partnership, MTDL not only strengthens its service portfolio but also leverages FPT IS’s global expertise in AI solutions and NVIDIA technology to accelerate the adoption of advanced technologies in Indonesia.

This aligns with the vision shared by Jensen Huang, where AI and cloud are seen as the main pillars for driving innovation and productivity.

Given MTDL's solid achievements and its strategy to strengthen its position in Indonesia's IT market, the outlook remains highly promising. 

We maintain a BUY rating on MTDL with a target price of IDR 840

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