Company Report | Nov 15, 2018
Media Nusantara Citra Tbk | Summary (IDR bn)
2017 2018E 2019F 2020F
In 3Q18, MNCN posted the revenue of IDR1.84 trillion (+4.8% y-y)—the highest
growth in 2018—backed by the growth of 6.8% y-y to IDR1.82 trillion in
revenues posted by the ads and content segments. On an annual basis, the downtrend in programs & contents expenses of 2Q17—relating to strategies for 100% local contents in 2018—did not continue in 3Q18 and throttled the 3Q18 margin to 58.8% (vs. the 3Q17 margin of 64.3%)
Continued Headwinds of Forex Losses
Although the 3Q18 forex loss amounted to IDR155 billion, lower than the 2Q18, its amount had soared to IDR376 billion since the early of 2018. We project that the loss lingers still until at the end of 2018, skyrockets than the forex loss of FY2015, and whittles away net profits and net margins of FY18. Indeed, the rupiah depreciation in 2018 worsened the 9M18 interest expenses, ballooning to 47.8% y-y.
A More Intense Competition in 2018
Post-the 2018 Asian Games Event, MNCN’s audience shares is still below
SCMA. Its strategy for improving its content qualities is futile to enthrone it as the leader of audience share. It is powerless to fight against SCMA’s intense competition. Its current powerless state is in a stark contrast to its prior powerful state in 2017 when it jostled for the leader of audience shares with effortless endeavors.
Target Price of IDR875
We use an estimate of a forward P/E of 7.2x (2.1 SD lower than the last 3-year
average). The target price implies a 2019E P/E of 7.6x. Now, MNCN is traded at a 2019E P/E of 6.7x.
Michael Tjahjadi
Source: Company, NHKS Research
MNCN Quarterly Net Profit | 3Q16 - 3Q18
Source: Company, NHKS Research
MNCN Quarterly Revenue | 3Q16 - 3Q18
All-Time Audience Share by Group | Jan ‘17 -Oct ‘18
Source: Company, NHKS Research
Margin Ratios | 3Q17 - 3Q18
Source: Company, NHKS Research
Performance Highlights
MNCN Quarterly Ads & Content Revenue | 3Q16 - 3Q18
Source: Company, NHKS Research
Prime Time Audience Share by Group | Jan ‘17 -Oct ‘18
Asia Pacific Media Company
MNCN is one of Indonesia-based media companies with the largest number of free-to-air TV portfolios. Its 4 free-to-air TV
channels are RCTI, MNCTV, GTV focusing on entertainment, and iNews focusing on news and sports. Another to its free-to-air
TV channels, it has 20 pay TV channels.
To support its business core, MNCN runs radio, printed media, content production, content library, and talent management businesses. In June 2018, it performed Initial Public Offering (IPO) of its subsidiary running a content business: PT MNC Studios International Tbk (MSIN).
MNCN’s Competitiveness in the Asia Pacific
MNCN is capable of posting the high revenue, net profit and net profit growth, even it is the best among its peers in the Asia Pacific. Indonesia is home to the profit-making media industry, notably television media. In light of Indonesia’s large numbers of
populations, the industrialists of fast-moving consumer goods, cigarettes, and e-commerce sectors to make a good use of
television as the main media for marketing their products.
However, the paradigm shift in the marketing medium from
television to digital media is on the rise. Additionally, production expenses and business expenses in Indonesia are
relatively lower than are that of its peers in the Asia Pacific.
Source: Bloomberg
Astro Malaysia Holdings 1,404 1,756 1,360 128 -29.60% 9.4% 82.61% 11.3x 10.1x
Multiple Valuation
Forward P/E band | Last 3 years
Source: NHKS research
Dynamic Forward P/E band | Last 3 years
Source: NHKS research
Rating and Target Price Update
Target Price Revision
Date Rating Target Price Last Price Consensus vs Last Price vs Consensus
05/03/2018 Buy 1,550 (Dec 2018) 1,305 1,902 +18.8% -18.5%
07/12/2018 Buy 1,125 (Dec 2018) 905 1,595 +24.3% -29.5%
09/17/2018 Buy 1,125 (Dec 2018) 840 1,396 +33.9% -19.4%
11/14/2018 Hold 875 (Dec 2019) 775 1,289 +12.9% -32.1%
Source: NHKS research, Bloomberg
Closing and Target Price
Source: NHKS research
Analyst Coverage Rating
Source: Bloomberg
NH Korindo Sekuritas Indonesia (NHKS) stock ratings
1. Period: End of year target priceSummary of Financials
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