Company Report | Sept 17, 2018
Media Nusantara Citra Tbk | Summary (IDR bn)
2017 2018E 2019F 2020F
IDR362 billion in the revenue and net profit, respectively. The surge in revenue was backed by the incline of 5.8% y-y to IDR2.04 trillion in the revenue posted by the ads. and content revenues. MNCN succeeded to post a stellar growth in the revenue in light of its downturn audience share in the early of 2018. On the quarter basis, its revenue edged up 30.3% q-q because its ahead of Idul Fitri local soap operas successfully attracted
audiences.
However, the rupiah’s exchange rate for the U.S. dollar depreciated further whittled away its bottom line. Since the early of 2018, the loss of foreign exchange rate reached IDR221 billion. 2Q18’s pre tax profit margin also declined to 27.4% (vs. 33.8% in 2Q17).
Spurred by Trend of Upbeat Ads. Expense
The ads. revenue increased by 4.17% y-y to IDR3.54 trillion in 1H18. The increase aligned
with the trend of upbeat ads. expenses on the national basis. According to Nielsen, a leading global information & measurement company, 1Q18’s ads. expenses in the mass media was buoyant at around 5% y-y (vs. +4% y-y in 1H17). The TV media still dominated
the biggest ads. expense portion of 82% because the TV’s coverage to Indonesia reached 96%.
To Remain Focus on Strengthening Content Quality
Another to the upbeat ads. expenses, the content revenue grew further. In 1H18, the content revenue climbed by 42% y-y to IDR760.9 billion. In future years, MNCN likely
improves its content quality and expands its local content to 100% at the end of 2018. The strategy likely bolsters its top line margin in ahead years.
Target Price of IDR1,125
We use an estimate of a forward P/E of 10.0x (2.1 SD lower than the last 3-year average).
The target price implies a 2018E P/E of 12.7x. Now, MNCN is traded at a 2018E P/E of 9.9x.
Michael Tjahjadi
+62 21 797 6202, ext:114
Source: Company, NHKS Research
MNCN Quarterly Net Profit | 1Q16 - 2Q18
Source: Company, NHKS Research
MNCN Quarterly Revenue | 1Q16 - 2Q18
All-Time Audience Share by Group | Jan ‘17 -Aug ‘18
Source: Company, NHKS Research Margin Ratios | 1Q17 - 2Q18
Source: Company, NHKS Research
Performance Highlights
MNCN Quarterly Ads & Content Revenue | 1Q16 - 2Q18
Source: Company, NHKS Research
Prime Time Audience Share by Group | Jan ‘17 -Aug ‘18
2Q18 review (IDR bn) Gross Margin 58.8% 64.3% 68.1% 58.6% 60.4% 60.1% 1.6% 1.8% 0.3% 65.7%
EBIT 720 714 704 528 790 772 9.7% 49.6% 2.3% 770
EBIT Margin 35.7% 40.7% 42.2% 32.9% 37.8% 35.6% 2.1% 4.9% 2.2% 42.4%
EBITDA 851 826 800 638 911 905 7.1% 42.9% 0.7% 898
EBITDA Margin 42.2% 47.0% 47.9% 39.8% 43.6% 41.7% 1.4% 3.8% 1.9% 49.5%
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
Multiple Valuation
Forward P/E band | Last 3 yearsSource: NHKS research
Dynamic Forward P/E band | Last 3 years
Source: NHKS research
Rating and Target Price Update
Target Price RevisionDate 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%
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 price
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.
