Rapid Growth in the Digital Business
Digital Advertisements Stole the Show
• In 1H22, MNCN IJ recorded an increase in revenue to IDR5.3 tn (+8% YoY), in-line with the FY22E Bloomberg consensus, achieving 49.8%. The biggest contributor being the advertisement on both digital and non-digital platforms with IDR4.8 tn (+4% YoY).
• In the digital segment, MNCN managed to book an exceptional rise of top-line by 51.0% YoY to IDR1.3 tn, mainly driven by RCTI+ higher number of monthly active users to 65.3 mn (+1% QoQ/+102% YoY).
• With the shifting of media towards digital ecosystem, based on a research by Media Partners Asia, the media industry was targeted with a 19% CAGR on the digital industry from FY20-FY24F, thus increasing the business’ digital ads market to USD1.7 bn in FY24F. Additionally, the online video revenue in the digital industry is projected to reach USD1.5 bn by FY24F from USD482.0 mn in FY20.
• Meanwhile, in the non-digital segment, MNCN booked a lower top-line to IDR3.4 tn (- 8% YoY).
• MNCN still managed its status as the market leader of Free-to-Air (FTA) audience with 44%.
• MNCN had also managed to book a content & IP revenue of IDR835.8 bn in 1H22 (+15% YoY) as it continued in expanding its content distribution and licensing by IDR201.0 bn from third-party sales.
• In addition, its 2Q22 subscription revenue was booked at IDR138.7 bn (+12% QoQ) as Vision+ gained an increase in its subscribers to 2.3 mn (vs 2.2 mn in 1Q22).
Development of Contents Weighed on the EBITDA
• EBITDA was booked at IDR2.2 tn in 1H22 (+4% YoY), which is in-line with the FY22E Bloomberg Consensus, reaching 50% of the consensus. This implies the EBITDA margin of 42% (vs 43% in 1H21).
• The slight decrease in the margin was driven by an increase in the direct cost by 14% YoY to IDR2.1 tn from the continuing development of Vision+ as well as content production output in multiple FTA channels and distribution platforms.
• Additionally, the company’s net income recorded a slight increase at IDR1.3 tn (+6% YoY), which translates to margin of 25% (vs 26% in 1H21).
Valuation and Recommendation: NOT RATED
MNCN is currently traded at 4.98x PE, close to its STD-1 (5-years average). However, MNCN is affiliated with the Company, so we do not offer any recommendation related to company prospects. Recommendation: NOT RATED.
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