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26 Agustus 2021

IPTV IJ - MNC Sekuritas Equity Report 26 August 2021

A Never Ending Euphoria

Financial Highlight: Skyrocketing Performance
• In 1Q21, IPTV posted a net income of IDR1.00 trillion which experienced a double digit growth of 18.98% YoY (vs IDR842.66 billion 1Q20). Satellite services contributed 63.69% to IPTV's revenue.
• Meanwhile, revenue through digital IPTV and broadband services grew significantly of 46.04% YoY, equivalent to IDR231.50 billion in 1Q21 (vs IDR158.52 billion 1Q20). Followed by a 306.17% YoY increase in the other segment to IDR132.60 billion (vs IDR32.65 billion 1Q20).
• COGS slightly increased by 13.37% YoY to IDR766.48 billion in 1Q21 (vs IDR676.10 billion 1Q20), due to an increase in Set Top Box expenses of 49.82% YoY. The increase was in line with the increasing demand of digital TV services.
• This condition gives a magnificent results to the company's profit. Net profit rose by 217.16% YoY or equals to IDR95.62 billion in 1Q21 (vs IDR30.15 billion 1Q20).

The Party Ain’t Over
• Through MNC Vision, K-Vision, MNC-Play, and Vision+, IPTV reached 10 million users of pay-TV services per 1Q21. Subscriber growth will be in-line with the increase of Indonesia's digital penetration and the transition of analog TV broadcasts to digital TV, based on the Job Creation Law article 72 about the discontinuation of TV broadcasts, Analog Switch Off (ASO) no later than November 2, 2022.
• Currently MNC Group is the king in share of Pay TV channels with 25.90% market share (vs 19.01% in Trans Group, 15.91% in the SCM Group, 13.71% in the Viva Group).
• IPTV also focuses on quality and efficiency. By reducing STB/equipment cost, viewing card/CAS, outdoor unit and Low Noise Block (LNB) by at least 25%, allowing the Company to sell equipment for USD31/set, from USD44/set. This scheme will lower overhead costs, such as sales, technical, and other related costs.
• IPTV won the exclusive EUFA Euro 2020 broadcast license rights. Starting on June 12, 2021 to July 12, 2021 consisting of 51 matches until final.

What’s next on IPTV: Reaching Further and Going Global
• IPTV conducted a private placement on June 30, 2021, and announced July 2, 2021, with an exercise price of IDR260/share, with a potential fund raised of IDR172.95 billion to launch expansion.
• The company is currently pursuing an expansive strategy by acquisitioning 2 local cable operator (LCO, and also building a partnerships with other company. In May-2020, MVN completed its first LCO acquisition located in Batam, Riau Islands. There are 3 acquisition targets in 1H21 which will be completed in East Java, Central Java and West Nusa Tenggara with a total customer base of around 100,000. While the LCO Partnership is targeting 2 million subscribers.
• Building a partnership with Migo as an on-demand offline service provider, later Vision+ will be included on the Migo home page and become a prioritized partnership.
• On June 12, 2021, the company submitted a draft F-4 registration form to the US Securities and Exchange Commission to implement an IPO for the Nasdaq. The company will raise USD144 million in an initial public offering of shares on Nasdaq in July 2021. With Malacca Straits, the company is determined to bring the fastest growing OTT and streaming business in Indonesia to be listed on the Nasdaq.

Valuation and Recommendation: NOT RATED
IPTV is currently traded at 1.41x PBV, while it has only been traded for almost two year. However, IPTV is affiliated with the Company, so we do not offer any recommendation related to company prospects. Recommendation: NOT RATED.

IPTV

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