Date: October 22, 2024
Broker: UOB Kay Hian

Overview

Apple Inc. is currently facing challenges regarding the launch of its iPhone 16 series in Indonesia due to regulatory requirements related to the local component level (TKDN) certification. This report details the implications of these challenges on the company’s performance and market operations.

TKDN Certification Status

• Investment Levels: Apple’s investment for TKDN certification is reported to be 13% lower than required. As of now, Apple has invested Rp1.5 trillion, which has not yet met the government’s certification requirements.

• Regulatory Process: The extension of the TKDN certification is still in progress, and the certification’s expiration has halted the entry of the iPhone 16 series into the Indonesian market. The government has stated that without a valid TKDN certificate, Apple products, including the iPhone 16, cannot be launched.

Launch Implications

• Potential Delays: The uncertainty surrounding the TKDN certification may result in a significant delay between the global launch of the iPhone 16 and the pre-order period in Indonesia. It is anticipated that this could impact demand, as potential buyers may seek alternative options available in neighboring countries.

• Sales Impact: Apple products, including those other than iPhones, accounted for 45% of Erajaya Swasembada’s (ERAA) sales in the first half of 2024. The delay in launching the iPhone 16 could therefore have a substantial effect on ERAA’s overall revenue.

Revenue Forecasts

• Growth Expectations: ERAA forecasts a 15% year-over-year revenue growth in 2025, assuming that the TKDN certification is extended in a timely manner, enabling the launch of the iPhone 16 by late 2024.

• NPAT Projections: The net profit after tax (NPAT) for 2025 is expected to grow by 21% year-over-year. This projection is based on improved productivity in existing stores and the anticipated impact of the iPhone 16 launch on sales.

Conclusion

Apple’s current situation with its TKDN certification in Indonesia poses significant challenges for its iPhone 16 launch. The company’s ability to meet regulatory requirements will be crucial in determining the timing and success of its product rollout in this key market.