Indonesia 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 IJ, NEUTRAL, TP:IDR3,300) 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 2 programme. 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.