Please consider the rating criteria & important disclaimer
contributed by SCTV by 1.9% and IVM by 2.9% (1H18 vs. 1H17).
Jostling for Affirming
Audience Share
On the other side,
the increment of 12.3% y
-
y in the 1H18’s program and
broadcasting expenses was the reflection of SCMA’s ambition to affirm its
position of the market leader
in audience share. The expenses allocated
aims at creating fresh concepts and broadcasted programs (Liga Dangdut),
new soap operas, and special license (Go
-
Jek Liga 1). Of note, IVM, the
subsidiary of SCMA, obtained larger allocation of funds.
The concerted attempt was vividly portrayed at the broadcast of RCTI’s
anniversary celebration. SCMA through its two TV stations broadcasted
comparably entertaining programs such as Dilan 1990 (highest
-
grossing
2H18’s Performance Projected to Spur FY2018’s Performance
To the end of 2018, we project SCMA’s net revenue, particularly in 3Q18 to likely soar. In
the 3Q18,
the event of Asian Games’ whole
-
day airing for two consecutive weeks
is
likely a positive catalyst for the ads. revenue. Besides, the high audience share likely
spurs the 2H18’s performance.
Target Price of IDR2,500
We set the target price of IDR2,500 with an estimate of forward P/E of 25.1x (1 SD lower
than the 4
-
year average). The target price implies a 2018E P/E of 26.6x. Now, SCMA is
traded at a 2018E P/E of 22.2x.
SCMA at A Glance
SCMA currently is one of the market leaders in Indonesia’s free to air TV industry. It has
two prominent TV stations, namely SCTV and Indosiar (IVM). The local soap opera is the
key contributor to SCTV’s audience share, while the talent show program is the key
contributor to IVM’s audience share. Another to the free
-
to
-
air TV, SCMA also has the
supporting businesses such as production house and artists management.
Indonesia
-
based Media Industry in Asia Pacific’s countries
Indonesia homes to the profit
-
making media industry, notably television media.
Indonesia’s large numbers of populations are key takeaway for industrialists in fast
-moving consumer goods, cigarettes, and e
-
commerce sectors to make use of the
television as the main media for marketing their products. However, the paradigm shift
in the marketing medium from television to digital media is the noteworthy fact.
Indonesia’s large numbers of populations, low production cost, and low business cost are
factors contributing to the higher margin ratio of Indonesia
-
based media industry
Astro Malaysia Hold-
2,401
1,756
-
1.46%
41%
21%
39.9%
113.1%
13.2x
4.7%
Source: Company, NHKS research
Source: Company, NHKS research
Source: Company, NHKS research
Margin Ratios
| 1Q17
-
2Q18
Operational Performance
Quarterly Net Revenues (IDR bn)
| 1Q16
-
2Q18
Quarterly Net Profit (IDR bn)
| 1Q16
-
2Q18
Source: Company, NHKS research
Revenue from Advertising (IDR bn)
| 1Q16
-
2Q18
Source: Company, NHKS research
Source: Company, NHKS research
Multiple Valuation
Forward P/E band
| Last 4 years
Dynamic Forward P/E
band
| Last 4 years
Rating and target price
Date
Rating
Target Price
Last Price
Consensus
vs Last Price
vs Consensus
04/12/2018
Buy
3,200
2,710
2,897
+18.1%
+10.5%
06/25/2018
Buy
2,700
2,220
2,885
+21.6%
-
6.4%
08/29/2018
Buy
2,500
2,090
2,614
+19.6%
-
4.4%
Closing and Target Price
Source: NHKS research
Analyst Coverage Rating
Source: Bloomberg
Source: NHKS research
Source: NHKS research
NH Korindo Sekuritas Indonesia (NHKS) stock ratings
1.
Period: End of year target price
2.
Rating system based on a stock’s absolute return from the date of publication
Buy
: Greater than +15%
Hold
:
-
15% to +15%
Sell
: Less than
-
15%
Summary of Financials
DISCLAIMER
This report and any electronic access hereto are restricted and intended only for the clients and related entity of PT NH Korindo Sekuritas Indonesia. This report is only for information and recipient use. It is not reproduced, copied, or made available for others. Under no circumstances is it considered as a selling offer or solicitation of securities buying. Any recommendation contained herein may not suitable for all investors. Although the information here is obtained from reliable sources, it accuracy and completeness cannot be guaranteed. PT NH Korindo Sekuritas Indonesia, its affiliated companies, respective employees, and agents disclaim any responsibility and liability for claims, proceedings, action, losses, expenses, damages, or costs filed against or suffered by any person as a result of acting pursuant to the contents hereof. Neither is PT NH Korindo Sekuritas Indonesia, its affiliated companies, employees, nor agents liable for errors, omissions, misstatements, negligence, inaccuracy arising herefrom.
In IDR bn 2016/12A 2017/12A 2018/12E 2019/12E EBITDA/Assets 45.6% 38.6% 36.4% 36.4%
Net Revenues 4,524 4,454 4,921 5,290 Cash Dividend (IDR bn) 1,214 848 1,136 1,135
Growth (% y/y) 6.7% -1.6% 10.5% 7.5% Dividend Yield (%) 3.0% 2.3% 3.4% 3.4%
COGS (1,782) (1,835) (2,096) (2,222) Payout Ratio (%) 0.0% 0.0% 0.0% 75.0%
Gross Profit 2,742 2,619 2,825 3,068 DER 6% 2% 0% 0%
Gross Margin 60.6% 58.8% 57.4% 58.0% Net Gearing 28% 9% 3% 3%
Operating Expenses (752) (863) (934) (1,005) LT Debt to Equity 0% 0% 0% 0%
EBIT 2,003 1,770 1,916 2,089 Capitalization Ratio 5% 1% 0% 0%
EBIT Margin 44.3% 39.7% 38.9% 39.5% Equity Ratio 77% 82% 82% 84%
Depreciation 137 199 137 131 Debt Ratio 4% 1% 0% 0%
EBITDA 2,140 1,969 2,053 2,220 Financial Leverage 132% 126% 122% 120%
EBITDA Margin 47.3% 44.2% 41.7% 42.0% Current Ratio 3.0x 3.6x 4.0x 4.5x
