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Dec 13,2016 15:27:05

Surya Citra Media ($SCMA): Key takeaways from meeting with group CEO
Media: Indonesia
2017 Outlook
We recenly sat down for a coffee with Alvin Sariaatmadja, CEO of Emtek (Parent company of SCMA) and Commissioner of SCMA, our top media sector pick and a Bahana country top pick, to get more color on SCMA’s strategy for 2017 and onwards. Below are 5 key takeaways.
IEG (SCMA’s Content Arm) could be the future trump card   
IEG’s 51%-owned PT Screenplay Cinema recently produced a new Indonesian movie called “Headshot”, scheduled to premiere locally on 8 December 2016. The movie received good feedback during the premiere at the Toronto International Film Festival (TIFF) 2016, is rated 7.4/10 by IMDB, and features Iko Uwais, the famous martial arts actor who was the main star in “The Raid (2011)” and “The Raid 2: Berandal (2014)”. Alvin mentioned that Netlfix has already bought the online distribution rights for the movie for a good price. We believe this is a major stepping stone for SCMA to start unlocking the value of IEG and its content assets (also to gradually increase IEG’s revenue contribution from outside SCTV and Indosiar), with a similar trend going forward (see pages 20-21 for the valuation analysis of IEG in our in-depth media sector report, TV Broadcasters: Value emergence, 1 December 2016). It is also interesting that Singapore’s sovereign fund GIC (which also owns 8% in Emtek) has recently added to its Indonesia media play with a USD260m investment in Cinema 21 (Indonesia’s largest cinema operator), with Amit Kunal (Emtek’s Commissioner) also in charge of the investment.
One goes out (to Online Ads), but Another comes in (E-com. TV ads)
Alvin acknowledged that some foreign FMCG corporates have started allocating some of their ad budgets (<10%) to online platforms (Facebook, Google), which is not good news for TV. Nonetheless, he actually sees the gap being more than filled by E-commerce/OTA players like Tokopedia, Traveloka, and Bukalapak which are utilizing TV as a primary marketing medium to generate better site/apps traffic.
Cost Cutting and Likely Margin Expansion
The broadcast of Torabika Soccer Championship (TSC) will be retired next year, potentially reducing SMCA’s COGS by c.20%. We believe this is good news for the company, as TSC was clearly pricey (more expensive than Euro Cup 2016) but not a successful program. Also note that the British Premier League (BPL) broadcast will be completely gone in 2017. Management plans to replace the current sports line-up with Spanish La Liga, which is much cheaper, and expects the 2017E COGS to come down by 5-10%, against a high-single-digit top-line growth expectation, thereby translating to margin expansion. We expect the 2017 revenue to grow 8% (SCTV +6% and Indosiar +10%), vs. a 3% decline in COGS, translating to a gross margin expansion to 66% (from 62% this year), EBITDA margin expansion to 51% (from 48% this year) and EPS growth of 17% (vs. 0% in 2016E).

Dec 06,2016 15:15:01

Media: GIC buys USD260.7m stake in Cinema21

Singapore sovereign wealth fund GIC is investing IDR3.5tn (USD260.7mn) in Cinema 21, a company that operates Indonesia's biggest cinema chain, marking the latest foreign investment in the country's burgeoning movie industry. GIC's partnership with PT Nusantara Sejahtera Raya (NSR), which runs Cinema 21, Cinema XXI and The Premiere brands in Indonesia, will expand "NSR's cinema footprint nationally", according to a joint statement on Monday. (Reuters).

Bahana Comment: Note that GIC also owns a c.8% stake in Emtek Group ($EMTK), parent company of TV Broadcaster and content company of Surya Citra Media ($SCMA). GIC has been increasing its investments in Indonesia in the past year, including collaboration with Mega Manunggal ($MMLP), Intiland Development ($DILD).

Dec 06,2016 15:09:55

Indonesia Media: November 2016 TV Audience Shares
Consumer Discretionary: Indonesia
Winner of the month: VIVA, Trans, SCMA...  Loser: MNCN
Nielsen’s TV audience share data for the month of Nov-2016 was recently made public. We believe it is important to monitor the monthly TV audience share movement, as a laggard indicator of future adex revenue. In Nov-2016, MNCN lost a notable size of its market share to VIVA, Trans, and SCMA. Bahana is Overweight on Indonesia Media (TV Broadcasters: Value Emergence, 1 December 2016), with SCMA as our top media pick and among our top 10 country picks, now trading at 20.5x FY17E PE with 17% EPS growth and 48% ROE. We also have a Buy rating on MNCN, currently trading at undemanding 13x FY17E PE with 12% EPS growth and 16% ROE.

MNCN: Notable market share decline in RCTI and Global TV

MNCN booked in Nov-2016 a Prime Time (6-11pm) audience share of 39.9%, down 4.5ppt MoM from 44.4% in Oct-2016. This was fueled by RCTI (-3.1ppt to 27.7%), MNC TV (-0.1ppt to 7.9%), and Global TV (-1.3ppt to 4.3%). RCTI lost significant market share in November on the back of intensifying competition from Indosiar’s D’Academy Asia S02 and ANTV’s Indian dramas. RCTI managed to maintain the no.1 position, MNC TV remains at no.5, and Global TV remains at no.8.  

SCMA: Seeing promising recovery, thanks to Indosiar, as expected
SCMA booked in Nov-2016 a Prime Time audience share of 25.7%, up 1ppt MoM from 24.7% in Oct-2016. This was fueled by Indosiar (+1.2ppt to 14.2%) which managed to gain good market share, with D’Academy Asia s02 starting to kick off in the early stages, while SCTV was flat (-0.2ppt to 11.5%) with only 1 prime time drama doing well (“Pangeran s2”; translate to “Prince s2”) in the daily top 10. This is in line with our expectation that SCMA’s prime time audience shares have bottomed in 3Q16, with gradual market share improvement expected to reach 30%+ by 2Q17. Both SCTV and Indosiar managed to maintain their no.4 and no.3 positions respectively.

VIVA: Back-to-Back Indian dramas continued to perform well
VIVA booked in Nov-2016 a Prime Time audience share of 18.5%, up 1.3ppt MoM from 17.2% in Oct-2016. This was fueled by ANTV (+0.9ppt to 14.3%) and TV One (+0.4ppt to 4.2%). ANTV’s back-to-back Indian bollywood dramas from the afternoon (Anandhi, Gopi) to the evening (Lonceng Cinta, Mohabbatein) continued to do well, with TV One gaining some traction with good news coverage on the heated 4Nov2016 demonstration. Both ANTV and TV One managed to maintain their no.2 and no.9 positions respectively.


Dec 02,2016 13:00:37

Indonesia Media: TV broadcasters: Value emergence
Consumer Discretionary: Indonesia
Content is King, Distribution is Queen: OVERWEIGHT Indonesia Media
In line with higher GDP growth of 5.3% in 2017E, we are OVERWEIGHT the Indonesia Media sector, particularly as we see a rebound in adex next year (+10% yoy). Along with the sector’s attractive valuation (2017E: 16x PER, +16% EPS growth), we have a preference for the FTA-TV Platforms (advertising-based, cyclical), but adopt a bearish view on the Pay-TV space (subscription-based) on intensifying competition. We also like companies with good content assets, which should play a crucial role in the transition phase from traditional distribution platforms towards online in the medium-longer term. Thus, we have BUY calls on SCMA and MNCN, and initiate on LINK with a HOLD rating, and on highly-geared BMTR and VIVA at REDUCE. Downside risks: Macro downturn, weak IDR and online cannibalisation. This report marks the transfer of coverage of Indonesia Media to Henry Wibowo.
TV remains king of Ad Pie with positive adex growth
Indonesia’s ad industry is a USD2bn market, growing at an 8% CAGR over 2014-17E, and one of the most underpenetrated in the region (0.2% of GDP, vs. 0.5% for Asia), on our estimates. TV is the best medium for advertisers to seek audience eyeballs, making up 64% of the ad pie (stable from 2010), followed by Print 19% (down from 27% in 2010), Online 12% (up from 1% in 2010), Outdoor 3% and Radio 2%. TV’s muted growth in 2015 was fueled by a macro slowdown (GDP hit a 6-year low at 4.67% in 2Q15), not from online cannibalisation, with TV adex expected to rebound to 8%/10% in 2016/17E.
FTA TV: Oligopolistic market with high barriers to entry
With the National FTA TV license recently renewed in October 2016 for another 10 years (2016-26), the existing top-4 big groups will continue to dominate >95% of the TV market, in our view. Hary Tanoe’s MNCN is the market leader (37.1% audience share), followed by Eddy Sariaatmadja’s SCMA (25.6%), Bakrie’s VIVA (18.6%), Chairul Tanjung’s Trans (15.1%).   
Overlooked high-value content assets
By 2020, we believe SCMA’s (IEG & Screenplay) and MNCN’s (MNC Pictures & Sinemart) content assets can be worth USD700m/USD1bn, respectively, vs. currently underappreciated at almost 0; this would provide a boost to existing market caps of 30-50%. In our view, unlocking content value will be a key catalyst medium term. Distribution platforms continue to evolve over time (Radio to TV to Online), but content should remain king as a core value driver, especially in Indonesia where the local language is a high barrier.


Nov 29,2016 10:14:30

FSA released a new stock list for Syariah index

The Financial Services Authority (OJK) has released a new stock list for the Syariah index. The FSA has added Waskita Beton Precast ($WSBP), Energi Mega Persada ($ENRG), Aneka Gas Industri ($AGII), Malindo Feedmill ($MAIN), Gajah Tunggal ($GJTL), Bumi Resources Mineral ($BRMS), Cikarang Listrindo ($POWR), and Hexindo Adiperkasa ($HEXA). Furthermore, The FSA has deleted Surya Citra Media ($SCMA), Jasa Marga ($JSMR), Modernland Realty ($MDLN), and Nirvana Development ($NIRO). (OJK).

Bahana comment: SCMA's removal from the syariah index has been well flagged by management in the past couple of months, given the company's strong revenue growth coming from the tobacco sector (non-halal), which accounts for more than 10% of total revenue. Note that competitor $MNCN is also not inside the Syariah index list.

Nov 22,2016 12:49:51

Media Nusantara Citra: Studio Visit: Lights, Camera, Action! ($MNCN; Rp1,740; Buy; TP:Rp2,600)

  • We had a short tour of the new studio complex with several clients last week and met with a Sales Director of the three FTA TVs under MNC Group to discuss about rate card monetization. We are still positive on the stock as stronger audience share performance would still provide more bargaining power for higher rate card ahead.

  • Strong and complete infrastructure backbone. Our studio visit started with an insightful introduction on the intricacies on how a live program (‘Dahsyat’) is recorded in the new studio. With an upgraded infrastructure, the new studio complex would also be operationally ready to shift to the digital stream from analogue. The new complex is equipped with over 20 studios and is expected to increase in-house capabilities and reduce dependency on outsourced titles. In terms of margin, there is about 25-30ppt difference between in-house and 3rd party.

  • Higher advertisement spending seen. Several consumer companies have spent almost twice of the amount they used to. Share pie from local corporate has also increased from 40% to 60% as they spend more to grab market share due to tightening competitions. Meanwhile, cigarette companies are also more aggressive in TV ad spending, notably due to the ban on outdoor cigarette and tobacco product advertising in Jakarta. For FY17, the company sees opportunity in an ad spend increase from cell phone manufacturers as Chinese brands are entering the Indonesian market, while war on RTD tea and coffee eases.

  • Client relationship, reason for audience share monetization lags. Flat 3Q16 revenue growth underpinned our discussion on audience share monetization, but we note that lag in audience share monetization is due to client relationship. According to the Sales Director, as the company maintains good relationship with clients, hike in rate card could not occur too fast. However, we believe strong average audience share performance of +270bps YoY as of 10M16 would still provide higher bargaining power for rate card hike in FY17. Currently, iNews TV rate card stands about 10-15% of RCTI, while rate cards of MNC TV and Global TV are around 60% and 40% of RCTI, respectively.

  • Remain positive. All in all, the company believes strong audience share performance could be more visibly translated into top line next year. MNCN is currently trading at 13.7x FY17F P/E and we have a Buy call with TP of Rp2,600.


Nov 17,2016 13:38:26

Surya Citra Media: Reveals Share Buyback ($SCMA)

- A vote of confidence. The stock has continued its underperformance by falling 27.1% YTD. However, in the past two days, the company has disclosed recent share purchase transactions (Nov8-15) by $EMTK, its parent company with total transaction amounted to Rp89.5bn and average buyback price of Rp2,393/share.  In total, $EMTK bought about 37.8mn of shares or 0.3% of outstanding shares, bringing its total ownership on SCMA to 60.6%, up from 60.3% as of 9M16. Though the share buyback amount is not significant, we think $EMTK sees values in $SCMA’s share price (as we do) and is investing for that reason.

- Good buying opportunity. Stock decline which came on account of poor audience share performance and recent market jitters would therefore still be good buying opportunity considering: 1) management's commitment to improve audience share footing; 2) margin improvement ahead as sport programs would not drag down performance starting next year; and 3) proven track record of in-house production capabilities. All in all, we believe the stock is attractive. We think higher shares buyback average @Rp2,393 (vs. last closing price at Rp2,260) coupled with current low audience share are worth considering for $SCMA’s accumulation on weakness.

- Reiterate Buy. Risks on the stock are weaker than expected audience  share performance and potential exclusion from Shariah Index in Dec’16  due to higher income from cigarettes companies. Post exclusion from  Shariah Index should provide some risk off tone on the stock as  exclusion is a one-time event. We maintain our Buy rating with TP of Rp3,500. The stock is currently trading at 17.4x FY17F P/E

Nov 14,2016 17:09:33

Indonesia: Currency update: IDR depreciation: Don’t panic
Effects of a shallow FX market; Buying opportunities exist
Based on Bank Indonesia’s data, ytd the average daily turnover for the IDR spot market is only USD1.7bn, which is shallow by regional standards, reflecting just 0.5x of GDP (exhibit 1), one of the lowest among its regional peers. Even worse is the 1M NDF market, which only trades at USD0.7bn a day ytd. Unfortunately, the NDF sometimes can influence the spot market, particularly on pressure stemming from the recent Trump election. However, given such illiquidity, we advise investors to remain calm, particularly as we believe the fundamentals in Indonesia remain largely unchanged. We note that, through years of balance sheet repair since the 1998 Financial Crisis, the Indonesian stock market’s net gearing has improved from more than 150% back then to 27.3% in 9M16. Furthermore, we believe Indonesia is currently in a good position given that its 3Q16 CAD of 1.86% is the lowest since 1Q12. In fact, we think the current situation presents buying opportunities for investors as we expect the IDR to become stronger by year-end. It is worth pointing out that there should still be around USD10bn to come in from tax amnesty repatriation between now and the end of 2016.

Sensitivity analysis: 1% weaker IDR = 0.9% market EPS
Given recent IDR gyrations, we present our latest currency sensitivity analysis on the IDR/1USD, in an effort to aid investors in better gauging their investments in Indonesia. Our study, based on 87 non-financial stocks under our coverage (62% of total JCI market capitalization), shows that each 1% IDR depreciation could lower the EPS of our covered stocks by 0.9% overall (exhibit 5). That said, it is not a surprise that a recent 3% negative swing in the NDF market spooked investors, as it could translate into a 3.6% wipeout in 2017 market EPS growth.  

Winners: Coal, Metals, Oil & Gas and Plantations

A stronger dollar should in general spell good news for sectors with dollar revenue such as Coal, Metals and Oil & Gas and Plantations (exhibit 5). By stock, our sensitivity analysis indicates that $SIMP, $WINS, $TBLA, $PTBA and $SGRO should be the major beneficiaries of IDR deprecation within our basket of stocks (exhibit 2).

Losers: Poultry, Property and Consumer Discretionary
Against a backdrop of a weaker IDR, sectors with large USD costs and borrowings should suffer: Poultry, Property and Consumer Discretionary (exhibit 5). Stock-wise, losers of a stronger dollar include heavily leveraged companies under our coverage: $SMCB, $LPKR and $MAPI (exhibit 3).

Safe havens: Mainly Construction and Telcos  

For investors seeking shelter from currency volatility, we point to the Construction and Telco sectors (exhibit 10 & 24). In terms of stocks, $JSMR, $SCMA, $SIDO and $WSKT (exhibit 4) should have their earnings relatively least altered by FX swings.

Nov 14,2016 12:37:57

The 14th stimulus - e-commerce roadmap
The government announced its 14th economic stimulus package focusing on e-commerce roadmap in Indonesia, with main emphasis on the of Small Medium Enterprises (SMEs) and e-commerce start-ups through tax inventive. Acknowledging Indonesia potential to be the biggest digital economy in Southeast Asia with 93.4m internet users and 71m smartphone users by 2020, the stimulus policy on E-commerce is timely and continue to signify government’sprolific approach to encourage robust economic activity. The roadmap for e-commerce will be prepared in 2016-2019 with targets of 1,000 technopreneurs with USD10bn valuation which brings up the e-commerce business to USD130bn in 2020.
The e-commerce business is still in early stage of development in Indonesia, with large retail companies have been embarking into this segment, with $ACES, $MAPI and $LPPF owns and operate their e-commerce platform. However, the financial benefit of this stimulus is unlikely to be immediate, and would rather be gradual. We believe with more potential development in the e-commerce segment, it could support the ad-spend growth. In the 1H16, the e-commerce has made into the top 10 largest ad-spend in Indonesia, above the like of instant noodle. As such, the media company with strong market share domination such as $MNCN and $SCMA could also benefited in the longer run. Also, growing e-commerce business could be seen as one of potential tax source for government in the future.
The government stated the road maps in 8 aspects including: i) financing, ii) taxation, iii) consumer protection, iv) education, v) logistics, vi) infrastructure, vii) cyber security, and viii) monitoring. (Helmy Kristanto)

Sep 07,2016 10:17:09

Media: Media Nusantara Retains Its Top Spot

We maintain our OVERWEIGHT call on the sector with Media Nusantara as our Top Pick. We continue to like the company as an attractive stock in the sector. We view that it could book better advertising (ad) revenue growth in FY16F-17F from its audience shares domination. This ought to translate into a higher rate card, which would have an impact on 2H16 numbers. Meanwhile, we are waiting for a real recovery in terms of audience shares from Surya Citra - SCTV’s audience share remains low, as it declined by 11% MoM in August.

¨ Rajawali Citra Televisi Indonesia’s (RCTI) 9% MoM improvement in prime time audience shares maintain Media Nusantara Citra’s (Media Nusantara) dominance. In August 2016, RCTI was been able to maintain its first spot in prime time audience share, as it improved 9% MoM to 29.4%. Thanks to its strong programmes line up like Anak Jalanan, Tukang Bubur Naik Haji, and new drama series called Anugrah Cinta. Due to the improvement on RCTI audience shares, Media Nusantara has been able to maintain its dominance in prime time audience shares of 45.2% (flat MoM). We foresee that Media Nusantara will keep its strong dominance in prime time audience share in 2H16 due to its strong programme line up, in our view. We expect a higher rate card from RCTI TV stations in 2H16 as a result of its high audience share.

¨ Improvement in Indosiar prime time audience share helped Surya Citra Media’s (Surya Citra) performance. Surya Citra (SCMA) prime time audience share improved the most in August to 24.2% (or 12% MoM). The improvement was supported by Indosiar, whereby the prime time audience share grew by 48% MoM to 12.4% – we suspect it was due to its Stand Up Comedy Academy 2programme. Meanwhile, non prime time audience share for Indosiar jumped 22% MoM to 12.7% on the back of the TSC Torabika Super Championship 2016, which is aired live on Indosiar. Meanwhile, Surya Citra Televisi’s (SCTV) prime time audience share declined to 11.8% (or -11% MoM) – as we think that the market share was taken away by RCTI. We view that Indosiar would be a driver for Surya Citra in 2H16 on the back of the former’s good programme line up that could improve the latter’s audience share numbers.

¨ Trans Corp’s audience share declined the most in August. Trans Corp’s prime time audience share declined the most to 12.6% (or -11% MoM) in August. This was due to the poor performance of Trans TV, whereby the prime time audience share declined by 22% MoM – we suspect that the audience share was taken away by Indosiar. Meanwhile, Trans 7’s prime time audience share improved by 3% MoM.

¨ Maintain OVERWEIGHT on the sector, with Media Nusantara as our Top Pick. We continue to like the company as an attractive stock in this sector, given:
i. Better margins from cost savings due to the completion of three new studios and potential acquisition of a production house;
ii. A strong program line up in 2H16 to drive its rate card;
iii. Potentially higher FY17 dividends

¨ Meanwhile, we remain NEUTRAL on Surya Citra as we view that SCTV’s low audience share numbers may pose an earnings risk in the 2H16 if it does not recover. Downside risk to our call for Surya Citra would be SCTV’s audience share failing to recover. On the flip side, its upside risk is improved audience share numbers that leads to a higher rate card. (David Hartono).


Aug 10,2016 15:56:59
Strong 2Q16 showing, as expected
- Solid advertising revenue growth
- Audience share lead widens
- Expect further improvement in 2H16, maintain BUY

Investment Thesis
With control of four of Indonesia’s 11 privately owned national TV channels, No. 1 TV broadcaster MNCN is in a strong position to capture a large share of growth in domestic advertising spend as consumer confidence improves.

1) Strong 2Q16 advertising revenue drives earnings rebound – 2Q16 net profit rose 27% YoY / 9% QoQ to IDR523b (30% of FY16E forecast), supported by strong revenue growth of 12% YoY / 32% QoQ to IDR2.03t (28% of FY16E). 1H16 earnings was 58% of FY16E, boosted by FX gains on its USD debt. Excluding FX, 2Q16 earnings surged 45% QoQ, but 1H16 earnings fell short (42% of FY16E) due to a weak 1Q16.

2) Impressive, sustained audience share gains – MNCN’s audience share lead over rival SCMA widened further in April-July, with 7M16 prime time/all time share at 44.9%/37.2% (7M15: 34.5%/34.8%) vs. SCMA’s prime time/all time 25.1%/25.7% (7M15: 31.2%/28.7%). MNCN’s 2Q16 revenue was boosted by improved monetisation of No. 1 TV channel RCTI’s top drama Anak Jalanan, and other popular programmes such as the Euro Cup, which aired in June-July. In its earnings call, management was upbeat and signalled further rate card hikes for 2H16, following a 1H16 +11% YoY increase.

3) Upbeat 2H16 outlook, maintain BUY – We expect strong 2H16 ad revenue growth for MNCN, supported by its solid audience share lead, higher industry adspend and potential rate card increases. RCTI’s Anak Jalanan remains the top-rated drama by a wide margin, while the rest of MNCN’s 2H16 programming line-up also looks strong. Reiterate BUY with unchanged IDR2,500 TP. Potential short term catalysts are further rate card hikes and audience share gains, and an acceleration in industry adspend growth supported by improving consumer confidence.


May 11,2016 12:43:02
Media: New MNCTV Series Maintains MNC’s Domination
We maintain our OVERWEIGHT call on the sector, as we expect the media players to report better 2Q16 numbers. This is given that consumption is likely to pick up on a seasonal high in conjunction with Lebaran. Based on Nielsen’s April prime time audience share data, Trans Group reported a 10.9% MoM improvement while Surya Citra lost, with audience share dropping 11% MoM. MNC has maintained its prime time domination, with audience share standing at 45.9% MoM.
¨ Media Nusantara Citra (MNC) maintains its prime time audience share dominance as it improved by 3.4% MoM to 45.9%. This was due to improvements at MNCTV and Global TV. MNCTV’s prime time audience share jumped by 19.5% MoM on the back of new drama series 7 Manusia Harimau New Generation. Global TV’s prime time audience share improved 5.2% MoM in April. We foresee MNC maintaining this domination in May on the back of the programme line ups at its RCTI and MNCTV stations.

¨ Surya Citra Media (Surya Citra) was the biggest prime time loser since in April, its prime time audience share fell by 11.4% MoM on the back of poor performances from both its TV stations. SCTV’s prime time audience share declined by 4.4% MoM, as it lost market share to RCTI’s and MNCTV’s new drama series. Meanwhile, Indosiar could not continue its strong performance in April, with audience share falling 14.8% MoM.

¨ Indonesia Super League to drive SCTV audience share in May. In our view, we believe an improvement in SCTV’s audience share is to start in May. This is because it has begun to broadcast Indonesia Super League matches as at end-April. Management said audience share had improved in the first week of May on the back of this football league. The Indonesia Super League is slated for airing on Fridays, Saturdays and Sundays in both prime time and non-prime time slots.

¨ Strong performance as well for MNC in terms of all time audience share. MNC’s all time audience share improved 4.2% MoM to 37.3% as all its TV stations performed well in April. MNCTV reported the biggest jump in all time audience share, ie 11.4% (+9.6% MoM). Global TV’s share also improved by 5.3% MoM to 6% during this period.

¨ Maintain OVERWEIGHT on the sector, with MNC as our Top Pick. We continue to see MNC as an attractive stock in this sector. This is because we think that the company can book better advertising (ad) revenue growth in FY16-FY17 from its audience share domination. This ought to translate into a higher rate card, which would see an impact on 2Q16’s numbers. We believe that the stabilisation of the IDR against the USD could also improve MNC’s earnings in FY16. However, we remain cautious on SCTV’s poor prime time audience share performances over the past several months. This may pose an earnings risk in 2H16 if the company does not book a recovery. For the 2Q16, we foresee that both companies are likely to have good performances on the back of the Lebaran festivities, which is a seasonal high for the domestic media industry.


Apr 18,2016 08:58:54
Surya Citra Media (SCMA) - Hopes For a Swift Recovery

We downgrade our call to NEUTRAL (from Buy) with a lower IDR3,300 TP (3% upside) as SCTV’s audience share declined further to 8.8% in Mar 2016 – the lowest since 2011. Also, we think the recovery in the media industry may not benefit Surya Citra in the near term due to its low audience share. Hence, we cut FY16F-17F earnings to IDR1.6trn/IDR1.8trn respectively from IDR1.73trn/IDR2.0trn. We foresee FY16F GPM would stay at 64% due to the company’s recent purchase of Indonesia Super League in an effort to boost its audience share.

Mar 10,2016 08:43:56
TV Guide-Feb 16: Return of D’Academy

- $SCMA is slowly gathering pace to catch up with its peers by recording a growth of 110bps MoM for all-time audience share due to the return of D’Academy. VIVA again recorded a strong non-primetime share growth of 80bps MoM due to its new selections of Indian dramas.

- $SCMA returns on all-time shares. $MNCN remains the leader of all-time share, recording a 36.2% share (-90bps MoM) in Feb’16. SCMA came in second place with an improved share of 26.3%, indicating a 110bps MoM increase. Meanwhile $VIVA has managed to record another growth in all-time share by 60bps MoM to 18.3%, thanks to its strong non-primetime performance. Trans’s share fell by 30bps MoM to 15.3%.

- $MNCN remains the king of primetime. It seems like there is nothing that can disrupt $MNCN’s position in primetime share; the group represents 45.8% share. Albeit having declined by 70bps MoM, the group remains the strongest. RCTI with its strong drama series remains the backbone of its primetime glory, recording a strong 32.0% share in primetime (+140bps MoM). However, both MNC TV and Global TV both recorded decline in shares of 80bps and 130bps MoM respectively. We suspect the shares were eaten up by Indosiar.

- Indosiar made a comeback and supported $SCMA on primetime. SCMA managed to book 210bps primetime share growth in February to 27.2%. Indosiar’s share has risen by 380bps MoM and was the main supporter of the group’s share. The growth was driven by the re-launching of the third season of D’Academy, which managed to maintain its position within the top 5 daily program rating throughout Feb’16. SCTV’s share, however, has fallen by 170bps MoM to 9.2%, an all-time low for the network. Overall, $SCMA also managed to eat up some share from Trans, whose share fell by 100bps MoM to 11.2%. Meanwhile, VIVA’s share grew by 20bps MoM to 11.8%.

- $VIVA continues to lead in non-primetime. $VIVA recorded an increase of 80bps MoM for non-primetime share, making the total non-primetime share to be 21.7%. $VIVA's strong performance came from ANTV, which became the leading network for non-primetime since Jan16, recording a 2-year high of 17.5% non-primetime share, beating long-time leader, SCTV. ANTV’s brilliant non-primetime audience share has been driven by its Indian drama series, Uttaran and Veera. In addition, their new Indian drama series ‘Kaali dan Gauri’ that have been slotted in between Uttaran's and Veera's schedules, have also been getting good response from the audience, making into the top 10 daily program rating since it was released.

- Indosiar aided $SCMA in non-primetime. $SCMA came second in non-primetime share growth after recording a 50bps MoM growth in share thanks to Indosiar. Re-airing of D’Academy has helped $SCMA on non-primetime hours. MNCN’s non-primetime share declined by 80bps MoM as a result of weaker MNC TV and Global TV. We suspect Indosiar has eaten up shares from MNC TV and Global TV. Meanwhile, Trans’s share is relatively flat, growing by 10bps MoM.
Mar 04,2016 10:09:52
This Fund Manager Is Turning to TV to Profit From Indonesia Boom

Samsung Asset Management Ltd.’s Alan Richardson has a new take on how to profit from Indonesia’s resurgent economy: buy the TV stocks that will benefit from increased ad spending by high-flying consumer companies, rather than those shares themselves.

With consumer stocks in Southeast Asia’s most populousnation trading at the highest valuation in over a decade compared with emerging-market peers, media stocks offer an attractive alternative, according to Richardson, a Hong Kong-based money manager at Samsung Asset.

The South Korean investment firm that oversees $112 billion of assets globally started accumulating shares in PT Media Nusantara Citra ($MNCN) and PT Surya Citra Media ($SCMA) last month.

“Media companies are the way to go rather than buying consumer stocks that have already rallied significantly," said Richardson, who correctly predicted further declines in Indonesia shares in August before they bottomed the following month.

“Because economic conditions are stabilizing in Indonesia and inflation is coming down and the rupiah is starting to stabilize, consumer companies are increasing their advertising budgets.

”Investor confidence is returning to Indonesia after atumultuous 2015, with the benchmark Jakarta Composite Index climbing 18 percent from its September 2015 low.

Indonesian consumer stocks including PT Indofood Sukses Makmur ($INDF), a maker of instant noodles and baby food, and PT Charoen Pokphand Indonesia ($CPIN), a distributor of animal feeds, have led gains in Southeast Asia.

While Indonesia’s consumer stocks are directly benefiting from the country’s economic recovery, Richardson said it might be too late to jump into the sector now. The MSCI Indonesia Consumer Staple Index trades at 38 times reported earnings, nearthe most expensive relative to their emerging-market peers since2001, after gaining 24 percent this year.

Shares of Media Nusantara Citra ($MNCN) and Surya Citra ($SCMA) could rally as much as 40 percent in the next 12 months as earnings improve, said Richardson, whose Southeast Asian equity fund has beaten 97percent of its peers over the past five years with an 11 percent return.

The shares trade at 26 and 28 times reported earnings, respectively. Net profits will rise at least 13 percent this year and 16 percent in 2017, according to analyst estimates compiled by Bloomberg.

“They’re the most obvious proxies to Indonesia’s improving economy and growing consumer spending,” said Richardson. “They’re starting a new earnings up cycle. ”Foreign investors have poured net inflows of $265 million into Indonesian equities this year, making the nation’s stockmarket Asia’s best performer. The economy, Southeast Asia’s largest, expanded at a faster-than-expected 5 percent in the three months to December, picking up from its slowest pace in almost six years in the second quarter.

“With currencies stabilizing, I can focus more on stockselection,” said Richardson. “I don’t need to worry about macroeconomic issues affecting stock valuations.”

Feb 09,2016 11:07:03
Good Start To The Year For Media Nusantara

In Jan 2016, Media Nusantara managed to maintain its solid performance – its prime time audience share improved 6% MoM to 46.5%, driven by a strong showing from its three TV stations. Meanwhile, Trans Corp was the top gainer in prime time audience share in Jan 2016 (+26%) due to its recently-aired programme, Improvisasi Selebriti. Surya Citra’s prime time audience share, on the other hand, continue to dip this month to 25% (-22% MoM). We maintain BUYs on Media Nusantara and Surya Citra.

¨ Audience share dominated by Media Nusantara. Based on Nielsen’s data, Media Nusantara Citra’s (Media Nusantara) ($MNCN) prime time audience share improved in Jan 2016 and grew by 6% MoM to 46.5%. The strong growth was driven by a solid performance from its stations MNCTV (+10% MoM), GTV (+15% MoM), and RCTI (+3% MoM). The robust performance from MNCTV and GTV was due to new drama programmes like Centini Cantik and Pacar Baru. According to Nielsen’s data on Indonesia’s top 10 TV programmes, RCTI’s drama series called Anak Jalanan still occupies the top position in audience share and TV ratings. RCTI’s other drama series – Tukang Bubur Naik Haji, Kau Seputih Melati and Preman Pensiun 3 – were also listed among Nielsen’s top 10 drama programmes in the fourth week of January. We think RCTI has been able to grab market share from SCTV, as the latter’s prime time audience share dropped 2% MoM last month. Its dominant position in market share could translate to improved ad rates and greater bargaining power over advertisers.

¨ No recovery from Surya Citra. Surya Citra Media’s (Surya Citra) ($SCMA) prime time audience share was at 25% in Jan 2016 (-22% MoM). We have not been overly impressed by SCTV’s performance in the past few months, as its prime time audience share of 10.9% (-2% MoM) was at its lowest since March 2012. We have not seen its audience share recover after its new drama series was launched in Jan 2016. However, we think Surya Citra can recover from this low, and look forward to seeing a rebound stemming from newly-launched TV dramas scheduled to air in Feb 2016, ie Orang-Orang Pilihan, Elif Indonesia and Rahasia Cinta. Meanwhile, its Indosiar TV station’s prime time audience share fell 32% MoM after the conclusion of the previous season of its musical show D’Academy Asia.

¨ Recovery of Trans Corp and Visi Media Asia ($VIVA). The top gainer in prime time audience share in Jan 2016 was Trans Corp, whose share rose to 12.2% (+26% MoM). We think its strong performance was due to its new variety show programme, Improvisasi Selebriti, that was aired on 13 Jan. Meanwhile, Visi Media Asia’s prime time audience share of 11.6% (+12% MoM) was supported by Indian drama series like Uttaran, which also made it to Nielsen’s the top 10 drama series.

¨ Still BUYs on both media stocks under our coverage. We continue to see Media Nusantara as attractive due to its lower valuation of 8.8x FY16F P/E and strong audience share growth, which may lead to improved advertising rates. Furthermore, the new programmes like The Voice that will be aired in 1Q16 could help to maintain its audience share. We also maintain our BUY call on Surya Citra as we believe the company will continue to modify SCTV’s content in order to improve its audience share. Its next key launch is the third season of D’Academy Asia on Indosiar in 1Q16, from which we may expect audience share growth for the station.