Strong Domination From RCTI

Media Nusantara was the top gainer in prime time audience share in Dec 2015 (+8% MoM), driven by a good performance of its RCTI station (+14% MoM) which could further lead to a potential improvement in rate card. Surya Citra’s audience share in prime time grew by 2% MoM mostly due to the performance of the Indosiar station (+26% MoM). Meanwhile the station audience share of SCTV dropped to a three years low of 11.1% in Dec 2015.

RCTI prime time audience share grew by 14% MoM in Dec15; we believe RCTI has been able to grab market share from SCTV, as SCTV’s prime time audience share dropped 26% MoM in Dec15. We believe the strong performance in terms of audience share for Media Nusantara could translate into a higher rate card in FY16 and more bargaining power to lower the discount offered.

Unhappy with the performance of SCTV in Dec 2015
Surya Citra Media’s (Surya Citra) (SCMA IJ, BUY, TP: IDR3,700) generated a prime time audience share of 32.1% in Dec 2015 (or +2% MoM). We are not pleased with the performance of SCTV over the past few months in terms of their audience share. The prime time audience share in Dec 2015 was of 11.1%, the lowest over the past three years.

SCTV has lost the market share in prime time audience to RCTI given a deteriorating popularity of their TV dramas. Based on previous experience, we believe the management may launch a new TV drama series in order to get the spotlight back and improve their prime time audience share number.

Surya Citra prime time performance was saved by Indosiar’s TV station which saw a 26% MoM improvement driven by its new TV shows including “D’Academy Asia”. We believe the strong performance for Indosiar and the success of D’Academy show in the previous years (FY14 and FY15) could translate into a higher rate card in FY16.

Maintain our BUY call on both counters
We continue to see Media Nusantara as attractive due to a lower valuation of 11.8x FY16F P/E, fueled by signs of economy recovery and potential improvement in ad revenue. We maintain our BUY on Surya Citra given its strong B/S, good corporate governance, high ROE and potential improvement in ad revenues.