Date of Report and Broker Information
- Date: October 29, 2024
- Broker: PT Maybank Sekuritas Indonesia
Company Overview
Media Nusantara Citra (MNCN) is a leading media company in Indonesia, with a stronghold in free-to-air (FTA) television. The company has diversified its media portfolio to include radio, print media, talent management, and digital platforms, making it a key player in the Indonesian media industry. MNCN’s FTA TV programming consistently ranks among the top in viewership, driven by its extensive library of over 300,000 hours of content. MNCN has also strategically expanded its digital presence through platforms like RCTI+ and Vision+.
Financial Performance and Valuation
MNCN’s financial performance has been steady, with an annual revenue growth rate of 0.9% between FY18 and FY23, reaching IDR 7.8 trillion in FY23. The company is expected to achieve a revenue growth of 4.8% between FY23 and FY26E, reaching approximately IDR 9.0 trillion. In FY23, MNCN maintained operating and net margins of 19% and 13%, respectively, which are projected to continue, backed by its balanced revenue mix and operational efficiencies.
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Key Financial Metrics
- FY23 Revenue: IDR 7.8 trillion
- FY24E P/E: 2.5x
- FY24E P/BV: 0.2x
- Expected Dividend Yield for FY25E: 3.5%
- Market Capitalization: IDR 4.2 trillion
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Share Price Performance:
MNCN’s stock performance has shown resilience despite market fluctuations, attributed to its diverse revenue streams. For instance, from 2016 to 2024, MNCN demonstrated an ability to sustain its stock value against broader market changes, such as the minimal impact from the 2016 U.S. election speculation surrounding MNC Group’s founder’s relationship with Donald Trump.
Business Segments and Digital Expansion
MNCN has strategically diversified its revenue streams across FTA TV, digital media, and subscriptions. Key components include:
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FTA Television: MNCN remains dominant in Indonesia’s FTA TV market, capturing a growing audience base, as evidenced by the rise in viewership for its TV drama “Cinta Yasmin.” MNCN achieved an all-day/prime-time/non-prime time audience share of 31.1% and holds the largest ad spend share among media groups as of 1H24.
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Digital Media:
MNCN has positioned itself strongly in digital media with platforms RCTI+ and Vision+, which had 69.7 million and 40 million monthly active users, respectively, as of FY23. These digital platforms allow MNCN to capitalize on the trend toward on-demand content, extending the lifespan of its content library and maximizing advertising revenue opportunities.
Environmental, Social, and Governance (ESG) Initiatives
MNCN is committed to sustainable business practices, with notable initiatives in environmental conservation and social responsibility:
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Environmental: The company has reduced energy consumption, with fuel and electricity usage down by 12% and 11.6% in FY22, respectively. It also promotes a paperless culture and implements water-saving practices, such as using tap sensors and reusing water for plants.
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Social Responsibility: MNCN provides various community services, including healthcare, bridge construction, and aid for underprivileged communities. The company promotes workplace diversity and employee welfare through equal employment opportunities and professional development.
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Governance: MNCN has a four-member Board of Commissioners, including two independent members. It has received awards for its Corporate Social Responsibility (CSR) efforts, reinforcing its commitment to strong governance practices.
Key Risks and Opportunities
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Opportunities:
MNCN stands to benefit from continued growth in FTA advertising and digital media expansion. The integration of talent management and production resources bolsters its ability to produce high-quality content and attract viewership, enhancing advertising revenue potential. The digital shift provides additional revenue opportunities by prolonging content lifecycles through streaming and on-demand services.
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Risks:
Economic factors, such as inflation and slowdowns, could lead advertisers to cut budgets, affecting revenue. Additionally, the younger demographic’s tendency to switch platforms could challenge FTA TV viewership, while cultural shifts toward video-on-demand services pose further risks.
Outlook and Conclusion
Maybank maintains a BUY recommendation for MNCN with a 12-month price target of IDR 550, representing a potential upside of 73%. MNCN’s attractive valuation at 2.9x P/E and 0.2x P/BV for FY24E, along with its market-leading position in both FTA and digital media, makes it a solid investment opportunity in Indonesia’s evolving media landscape.
