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.