IPTV IJ - MNC Sekuritas Equity Report 15 December 2020

PT MNC Vision Networks Tbk (IPTV IJ)

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Reaching Further: Continued its Strong Momentum

The 9M20 results have confirmed the strength and resilience of its integrated business model

• Resilient performance with revenue reaching IDR2,686.23 billion (+6.28% YoY) in 9M20, followed by a substantial increase in net income before minority to IDR236.11 billion (+50.61% YoY).
• DTH/satellite services (+4.59% YoY) along with Digital, IPTV and Broadband segment (+14.51% YoY) revealed strong growth, largely due to a higher number of viewers and watch time as most people stay at home during a pandemic.
• IPTV has also managed to maintain a healthy balance sheet with DER relatively stable at 0.51x.
• Management believes that the positive profitability trend to continue throughout the year as the Company’s subsidiaries performance remains on track to achieve its financial and subscriber targets that translate into meaningful incremental value creation.

Most of strategies are fully on track; Looking forward to record astonishing result

• IPTV implement new initiatives on its subsidiary, MNC Vision (2.1 million subscribers), from lending STB/equipment to selling it outright to consumers which will drive higher revenue, healthier cash flow, and less overhead cost by avoiding STB/equipment retrieval and reparation cost due to churn.
• MNC Play along with Playbox and Vision+ is in the progress of a potential Special Purpose Acquisition Company (SPAC) transaction with a valuation of around USD400 million. If it went well, the two units will serve as the two main operating entity under the SPAC listed on NASDAQ.
• Acquiring local content operator (LCO) is intended to prevent piracy and broaden MVN networks as IPTV focuses on low capex business model across all unit while working together with neutral network providers instead of rolling out new network, also using Playbox to sell IPTV services to customers with different internet providers.
• IPTV is looking to introduce digital ordering feature on its prepaid DTH service (QR link) that will boost purchase of top-up voucher for K-Vision’s existing subscriber.
• IPTV has 6.7 million of subscribers as of Jun-2020 through MNC Vision (post-paid DTH), K-Vision (pre-paid DTH), MNC Play (IPTV and broadband), Play Box (Android TV OTT Box), and LCO, reaching 91.78% of FY20E target amounted to 7.3 million subscribers.
•  Hidden treasures: monetization of its 5G and LTE spectrum (150Mhz) along with lease back strategy.

Valuation and Recommendation: NOT RATED

IPTV is currently traded at 1.92x PBV, while it has only been traded for almost one year. However, IPTV is affiliated with the Company, so we do not offer any recommendation related to company prospects. Recommendation: NOT RATED.

IPTV