EQUITY RESEARCH SCMA - Company Update - 26 March 2019 CIPTADANA SEKURITAS ASIA BUY Surya Citra Media TP: Rp2,050 (+19.9%) Venturing into digital realm
Sector Media Gone are the days of awe A paradigm shift on how people access media exacerbated by limited FMCG’s A&P budgets Bloomberg Ticker SCMA IJ have stunted growth of media companies which triggered derating in the industry. While we believe soft consumptions pressure shall subside, the digital shift is structural. Share Price Performance Last price (Rp) 1,710 SCMA is going digital Avg. daily T/O (Rpbn/USDmn) 24.7/1.7 To anticipate the structural shift, SCMA recently announced a plan to enter into several transactions with the purpose of embarking new businesses in online and related digital 3m 6m 12m sphere. The first set of transaction is to acquire EMTK’s digital companies with estimated Absolute (%) -8.6 -8.8 -36.7 value of Rp323 bn. SCMA plans a share-swap deal in which it will issue new shares at Relative to JCI (%) -12.1 -16.1 -39.4 Rp2,446/share which will be used to pay EMTK. We estimate a potential dilution of c.1% from this transaction. This deal is subject to EGM, expected on May-19. Other transaction 52w High/Low price (Rp) 2,840/1,490 is acquiring Samara Media Entertainment (SME), which we believe will be done in cash.
3,000 5% The digital assets 0% The first asset is Vidio.com. It was launched in 2015 and now is the second most popular 2,500 -5% online video platform after YouTube. SCMA plans to monetize the platform with ads and by 2,000 -10% -15% providing premium contents. The second company is KapanLagiYouniverse, an integrated 1,500 -20% online media portal spanning from news, sports, entertainments, etc. It has been running -25% for several years and is now the largest integrated online portal in Indonesia. Next, is EYE 1,000 -30% which is on the out-of-home (OOH) advertisement business to capture the high potential of 500 -35% -40% OOH ads. EYE now has 76 boards in strategic area such as in SCBD, Senopati, Senayan and 0 -45% airports. The last company is SME which runs the film studio, social influencer, and events 19 18 18 18 18 18 18 19 18 18 19 18 18 management business to complement with SCMA’s other businesses. ------Jul Oct Jan Apr Jun Feb Dec Sep Nov Aug Mar Mar May Non-FTA businesses SCMA 1yr Rel. to JCI (RHS) Apart from the aforementioned new ventures that will be acquired later, SCMA has already run other non-FTA-TV businesses. The first one is content producer company, IEG, Outstanding shrs (mn) 14,622 which incorporates Sinemart and Screenplay, among others. The former is a leading FTA- Mkt. Cap (Rpbn/USDmn) 25,003/1,765 TV contents maker, famous on its soap operas, while the latter is a movies maker which Estimated free float (%) 41.7 has been successful in producing some box office titles. Another interesting business is Whisper which enables advertisers to place their brands directly into existing contents Major shareholders with ‘geo-target’ feature that allows advertisers to promote different products in different Elang Mahkota Teknologi 60.8% regions of Indonesia at the same time, on the same TV shows. Public 39.2% Valuation and recommendation Our proforma analysis reveals a 1.0% and 3.8% potential EPS accretion in 2019F and 2020F. We have not incorporated the digital assets into our forecasts pending to further EPS Consensus clarity on the deals. We slightly tweak our numbers and tone down our margin Ciptadana Cons. % Diff assumptions to incorporate Company’s guidance. We believe SCMA is currently 2018F 106.3 105.5 0.8 undervalued, trading below regional peers average PER of c.18x and near to -2SD of its mean. We now pegged SCMA to 17.6x to 2019F PER, leading to TP of Rp2,050/share. 2019F 116.7 114.5 1.9 2020F 128.5 126.9 1.2 Exhibit 1 : Financial Highlights Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Revenue (Rpbn) 4,524 4,454 4,975 5,324 5,750 Operating profit (Rpbn) 2,003 1,772 2,053 2,247 2,481 Net profit (Rpbn) 1,501 1,331 1,555 1,707 1,879 EPS (Rp) 102.7 91.1 106.3 116.7 128.5 EPS growth (%) -1.5 -11.3 16.8 9.8 10.1 Gani EV/EBITDA (x) 11.6 12.7 11.1 9.9 8.8 +62 21 2557 4800 ext. 734 PER (x) 16.7 18.8 16.1 14.6 13.3 [email protected] PBV (x) 7.3 6.4 5.6 4.9 4.3 Dividend yield (%) 4.9 3.4 4.0 4.3 4.8 http://www.ciptadana.com ROE (%) 43.8 34.1 34.8 33.5 32.5 Source : SCMA, Ciptadana Estimates
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Gone are the days of awe Free to air (FTA) TV was once dubbed as the proxy to flourishing middle income class in Indonesia. Back in the early 2010s, double digit top-line growth was almost a given for the industry as CAGR of revenue was recorded at 18.5% in 2010-12 (Note: We use SCMA, MNCN, VIVA in our studies; we include IDKM in 2010-12 and proportionate its 1Q13 number to include its 5-month revenue as the acquisition was completed in May 2013 and SCMA began consolidating IDKM on June). SCMA outgrew the industry by booking 30.4% of revenue CAGR in the same period of 2010-12 thanks to its strong contents backed by solid management with superior corporate governance; its 2013 number may not be a good comparison as it was lifted by consolidating IDKM, however, even in 2014, a year after the acquisition, it still booked a solid growth of 10.3%. However, those glory days are now gone. Moving along, the story seemed to turn upside down. Industry’s top-line CAGR decelerated significantly to 3.4% in 2013-17 with growth plummeted to negative territory in 2015. SCMA still fared better than the industry in 2014-15 but came below in 2016-17 as ANTV, on a turnaround project with the guidance from Erick Thohir helming the Company as CEO, began to rise in prominence and garner some audience share from the top TV stations. In 9M18, SCMA is the only one who recorded solid growth thanks to the Asian Games, while VIVA was flat and MNCN grew by only c.3% YoY.
Exhibit 2: Media Companies’ Revenue and YoY Growth 16,000 30%
14,000 23.8% 25% 5.0% 12,000 19.3% 20% 10,000 13.3% 15% 8,000 10% 6,000 9.0% 5.2% 5% 4,000 4.7% 2.4% 2,000 0% -1.7% 0 -5% 2010 2011 2012 2013 2014 2015 2016 2017 9M17 9M18
Media Revenue (LHS) Growth (RHS)
Source: Companies, Bloomberg and Ciptadana
Exhibit 3: SCMA’s Revenue and YoY Growth 5,000 42.1% 43%
4,500 10.8% 38% 4,000 33% 3,500 28% 3,000 19.6% 23% 2,500 19.4% 18% 2,000 10.3% 13% 1,500 12.7% 6.8% 8% 1,000 4.0% 3% 500 -1.6% 0 -2% 2010 2011 2012 2013 2014 2015 2016 2017 9M17 9M18
SCMA Revenue (LHS) Growth (RHS)
Source: SCMA and Ciptadana
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We think there are two main reasons of the FTA-TV industry deceleration. Firstly, we believe the economy slowdown has dented FMCG companies’ sales which in turn lowered their advertising and promotion (A&P) budget. FMCG companies, ranging from Home & Personal Care (HPC), Food & Beverage (FB) and cigarette, are the c.80% of ads buyers in Indonesia; therefore ads revenues should be linked with their performances. We collected data from FMCG companies under our coverage (UNVR, ICBP, MYOR, KLBF, HMSP, and GGRM) and find that in the period when the sales growth is trending down (2013-17), A&P growth tends to be muted which ultimately affecting media companies’ revenue. As a ratio, the percentage of A&P expenses to sales ratio was also on a down trend. However, silver lining is apparent in 2019F as consumer spending is expected to improve, in part, driven by increasing social funds and election money. Our consumer analysts have an OVERWEIGHT rating on both consumers and cigarette sectors. Please refer to the pertinent consumer reports for further details.
Exhibit 4: FMCG Companies’ Revenue and YoY Growth 350,000 25%
300,000 19.6% 8.8% 20%
250,000 16.0% 13.5% 15% 200,000 13.1% 12.9%
150,000 9.0% 10%
100,000 7.6% 5% 50,000 5.7%
- 0% 2010 2011 2012 2013 2014 2015 2016 2017 9M17 9M18
FMCG Revenues (LHS) Growth (RHS)
Source: Companies, Bloomberg and Ciptadana
Exhibit 5: FMCG Companies A&P Expenses and YoY Growth
14,000 35% 32.7% 30% 12,000 8.4% 25% 10,000 20% 12.8% 15.6% 8,000 14.6% 15% 10% 6,000 10.7% 5.9% 8.7% 5% 4,000 0% 2,000 -3.4% -5% - -10% 2010 2011 2012 2013 2014 2015 2016 2017 9M17 9M18
FMCG A&P Expenses (LHS) Growth (RHS)
Source: Companies, Bloomberg and Ciptadana
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Exhibit 6: A&P Expenses to Sales Ratio of FMCG Companies 4.9% 4.9% 4.8% 4.7% 4.6% 4.6% 4.6% 4.5% 4.5% 4.4% 4.4% 4.4% 4.3% 4.3% 4.2% 4.2% 4.1% 4.1% 4.0% 2010 2011 2012 2013 2014 2015 2016 2017 9M18
Source: FMCG Companies, Bloomberg and Ciptadana
Another reason of the muted growth is the paradigm shift on how people access media. Digital innovations have disrupted our daily lives, including media consumption pattern. Although somewhat anecdotal, we observe that the number of FTA-TV viewers is continuously declining, especially among millennial. GetCRAFT, South East Asia content marketing network, mentioned in its published report that average daily use of internet is currently almost 4 times of television viewing time among Indonesian millennial. Moreover, Indonesian Internet Provider Association (Asosiasi Penyelenggara Jasa Internet Indonesia/APJII)’s latest report mentioned that the number of internet users in Indonesia has grew rapidly with CAGR of 19.1% in 2010-17. Meanwhile, HootSuite and WeAreSocial estimated +13% YoY growths of internet users in 2018 with 56% of penetration. Internet penetration in Indonesia is still relatively low compared to that of neighboring countries (Vietnam of 66%, Philippines of 71%, Malaysia of 80%, Thailand of 82%). With telco aggressive expansions (2019F capex at Rp55 tn, +14% YoY) and supports from Government’s Palapa Ring project, internet penetration will accelerate, in our view.
Exhibit 7: Indonesia Internet Users (in mn) 160 150 143 140 133
120 110
100 88 82 80 63 60 55 42 40
20
0 2010 2011 2012 2013 2014 2015 2016 2017 2018E
Source: APJII, HootSuite, WeAreSocial, Ciptadana
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Exhibit 8: Average Daily Use
Source: GetCRAFT
Consequently, as digital platforms garner more viewers, advertisers will shift to digital ads. This exacerbated media’s revenue decline as in the period of limited A&P budgets, FMCG companies must transfer some portions of the budget to digital ads. According to Media Partner Asia, digital ads revenue will lead Indo’s ads growth in Indonesia with CAGR of +18.2% in 2016-22F, while FTA-TV will only grow at a slower pace of +3.1% CAGR in the same period. The share of the pie will also shift accordingly with FTA-TV ads’ pie size is expected to deteriorated by -9.3pps to 52.7%, whereas digital ads is estimated to enlarged by +17.4pps to 30.4% during the period of 2016 to 2022F.
Exhibit 9: Share of Advertising Media in 2016 3.3%
13.4%
19.6% 62.0%
1.8%
FTA-TV Pay-TV Print Digital Others Source: Media Partner Asia, Ciptadana
Exhibit 10: Share of Advertising Media in 2022F 3.0%
30.8%
52.7%
12.2%
1.4%
FTA-TV Pay-TV Print Digital Others
Source: Media Partner Asia, Ciptadana
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SCMA is going digital The aforementioned grounds have triggered severe de-ratings on SCMA. At the 2015 peak, it traded at 30.9x PER, while the average PER is at 22.6x. Currently, SCMA is trading at 14.6x PER, trapped near to -2SD below its mean. While we believe the pressure from weak consumptions shall subside, the shift to digital is structural. It impairs the growth prospect of the Company (as demonstrated in the last few years), while growth story is one of the reasons of SCMA’s premium valuation, we believe. Moreover, the shift towards digital will continue to progress and will not revert back until a new paradigm arrives and disrupts with another innovation. To anticipate the shift, SCMA recently announced a plan to enter into several transactions with the purpose of embarking into new businesses in online and related digital sphere. The proposed acquisitions comprise of several entities as follow: a) 99% shares of PT Vidio Dot Com (Vidio.com) with expected transaction value of Rp104 bn. b) 50% plus 1 share of PT Kapanlagi Dot Com Networks (KLY). The transaction of KLY is estimated at Rp174 bn. c) 99% shares of PT Binary Ventura Indonesia (BVI). BVI owns 60% shares of PT Estha Yudha Ekatama (EYE). SCMA eyes to close the deal at Rp45 bn. d) 50% shares in Samara Media Entertainment (SME). The estimated value is still undisclosed.
Transaction a) to c) is actually an affiliated transaction as those entities under discussion are direct subsidiaries of EMTK. Therefore, in pursuant to capital market regulation, SCMA required to obtain shareholders’ approval at a shareholder meeting, planned to be held in May. One caveat is that the Company mentioned that EMTK will not vote on the EGM as it wishes to let the minority shareholders to decide. Therefore, the deal is still possible to fall through. The Company plans to issue new shares at Rp2,446/share to pay for the transactions. Rp2,446/share indicates a c.43% premium to last closing price. As the expected value of transaction a) to c) is at c.Rp323 bn, we estimate the potential dilution of c.1% to the minority shareholders. As for transaction d), we understand that SCMA will complete the transaction by paying cash to PT Benson Media Kreasi. This could happen as early as April, hence, SME may be the first Company to enter into SCMA’s book.
Vidio.com, the second most popular online video platform Vidio.com was launched in 2015. At the inception, it is a free channel offering re-runs of SCMA, IVM, and other EMTK group’s contents. As of June 2018, Vidio.com has 23.5mn monthly active users with more than 200mn video plays per month. With such traffic, Vidio.com is currently the second most popular online video platform in Indonesia after YouTube. As part of EMTK group, Vidio.com earned the rights to broadcast Asian Games live. Thanks to the popularity of the Games, especially on badminton matches, VIdio.com reported significant jump on the traffics. It garnered a lot of attractions and some of them have become active users ever since.
Exhibit 11: Vidio.com broadcasted Asian Games
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In preparation of the ownership transfer, Vidio.com has begun to monetize its channel. First and the simplest way is by putting ads into its existing contents. Previously, the Company mentioned that it did not put ads of any sort into the videos. We tried to watch one of its most popular soap opera, Cinta Suci, and are required to watch ads beforehand, although skip- able after 5 seconds of viewing (similar to YouTube). Viewers could watch some programs live, at the same time as screened on TV. Vidio.com also has a library that contains complete episodes of a program. It is updated daily, usually after the program was aired on TV. This feature enables viewer to follow the programs through Vidio.com. New viewers who just recently watch the show could also catch-up by going back through all of the episodes.
Exhibit 12: Ads before watching Cinta Suci
Source: Vidio.com, Ciptadana
Exhibit 13: Video Decks in Vidio.com: Cinta Suci and Liga Dangdut Indonesia (2019)
Source: Vidio.com, Ciptadana
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Exhibit 14: Vidio.com Free Library Contains SCTV’s Popular Soap Opera Line-ups
Source: Vidio.com, Ciptadana
Apart from the in-video ads, monetization comes from the new premium contents. Vidio.com recently launched its subscription based video on demand (VOD) service. It plans to continue acquiring high-quality contents to attract subscribers to its premium channel. The contents span from sports, movies to mini-series/drama. VIdio.com will buy the rights of some prestigious sporting events or leagues; some of which are unavailable in any other platforms. Planned shows include Barclays Premier League, Serie-A, La Liga, UEFA Champions League, Moto GP, F1 and others. Moreover, the Company mentioned that the rights of Gojek Liga 1, the Indonesian premier football league, will be transferred from IVM to VIdio.com later in the future. On the mini-series and drama, VIdio.com will supply the channel with imported contents and freshly made series. According to the Company, Vidio.com will utilize its proven contents producing arm of SCMA (under IEG), to create contents exclusive for Vidio.com. The series will be starred by top-rated stars with different concept compared to typical dramas in SCTV/IVM. They will run on seasonal basis with periodic new episode release (perhaps once a week). One title will have approximately 30 episodes and may take a break after one season is completed. If the show is successful, the next season of the series may be available. Moreover, IEG has already accrued experiences in producing local contents to on-demand platforms (Netflix). When we visited Vidio.com, we found that the premium section is already running. It has already had the contents mentioned above partially.
Exhibit 15: Vidio.com Premium Library: Sports offerings and Movies
Source: Vidio.com, Ciptadana
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Exhibit 16: Vidio.com Premium Library: Imported Series and Movies
Source: Vidio.com, Ciptadana
The monetization of the premium platform is by charging subscription fee. The subscription plan is available on daily and monthly basis. Daily subscription costs Rp10k/day, while on monthly basis, it charges Rp50k/month. It is now partnering with DANA (e-wallet owned by EMTK group, akin to Go-Pay or OVO) which provides cashback of Rp30k for monthly subscription, hence monthly subscribers need only to pay Rp20k per month with DANA. From the pricing mix, it is clear that Vidio.com’s priority is to pursue monthly subscribers. Its pricing point is quite competitive compared to other VOD platforms’ headline prices (our quick survey on Netflix, Iflix, and Hooq reveals price range of Rp69k-169k per month), albeit they also offer a variety of discounts on certain conditions (group package offerings, partnering with telcos, add-ons, etc).
Exhibit 17: Subscription Fees on Premium Content
Source: Vidio.com, Ciptadana
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To complement its web, VIdio.com is also accessible via apps (Vidio TV apps). The apps is currently available on both iOS and Android with 10+mn downloads and 4.2 ratings (Exh.18). To accelerate the penetration, Vidio.com is currently working together with major TV brands (i.e Samsung, LG, and Sony) and Android TV box to preload Vidio TV apps with free premier subscription for certain period.
Exhibit 18: Vidio TV apps
Source: Playstore, Ciptadana
In our view, VIdio.com entails the highest risks among other acquisitions. Not only is currently running on operating losses (due to lack of monetization so far), it also needs to incur more costs to acquire all of the contents. Operating leverage is high in this kind of business; Vidio.com needs to acquire a lot of paying subscribers to cover the content costs. Quality contents combined with the right pricing on correct target market are key. The Company is also aware of the risks; therefore it is open for a strategic partner (foreign entities with experiences on similar business are preferred) to run Vidio.com with ownership up to 49%. According to the Company, Vidio.com recorded an operating loss of Rp40 bn in 2018. SCMA is targeting 5mn paying subscribers within 3 years, equivalent to 21% of its current daily active users, implying expected annual streaming revenue of Rp3.0 tn (c.58% to 2018F revenue).
KLY: the largest digital media group in Indonesia KLY is a new entity as the result of PT Kreatif Media Karya (KMK) and PT Kapan Lagi Networks (KLN) merger. It is 51% owned by EMTK, 31% by Media Corp (SG), and 18% by the founders (Mr. Steve Christian and partners). Core business is on digital media, operating an array of popular website spanning in several categories (Exh. 19). Some websites already have some niche visitors who frequently visit the website. It also produces some contents, mostly designated to support the websites. As a group, KLY currently sits on top in the market share ranking with 40-45% share. It has 120mn unique visitors with 100mn video views per month. Monetization is derived from in-web ads, with banner, pop-up, and video ads are available in the websites. KLY recorded Rp250bn revenue in 2018 and was on a breakeven. It is aiming for Rp300bn revenue and Rp30-50 bn profits in 2019F. Profits are derived from higher traffics (means more revenue), while operating costs are relatively flat (most of the costs are fixed costs).
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Exhibit 19: KLY’s Website Portfolio
Source: KLY Website, Ciptadana
Eyeing growth on EYE BVI acquisition is performed to get the exposure to out-of-home (OOH) advertising business via its associate, EYE. EYE is a local OOH digital billboard and street furniture business. As at Mar-19, EYE owns 76 screens in strategic spots throughout the country, including SCBD Sudirman, Senopati, Senayan, and international airports in Jakarta, Bandung, and Lombok. We did a ground check of one of its digital billboard in SCBD, Sudirman. We think it is strategically located in a busy traffic near Pacific Place shopping mall with traffic lights on the side of the board. We think the overall quality is good and as it is digital, it conveys better messages compared to traditional billboard. It also can incorporate several advertisers on one board. When we visited, the advertisers on SCBD board include: LinkAja!, National Drug Agency (BNN), Bank Tabungan Negara, Arta Graha Group, and EYE internal ads.
Going forward, EYE is aiming to attract more advertisers. As a part of EMTK family, it has access to key agencies that can connect them to blue chip advertisers. It aims to expand its coverage to several key cities. It also targets to put physical ads in Jakarta’s MRT and new buses routes. SCMA said that the current OOH portion as total ads expenses in Indonesia only reached 1%, a very low number compared to Thailand’s of 12%. Magna Advertising estimated that OOH ads in Indonesia could reach USD373 mn (c.Rp5.5 tn) in 2022F. Currently, EYE’s shareholders are: BVI-EMTK’s associates (60%), Plan B (Thailand’s largest OOH player by 10%), and the founder unrelated to EMTK or SCMA (30%). EYE is generating c.Rp100bn revenue in 2018 and is already profitable.
Exhibit 20: EYE’s Billboard in SCBD Showing LinkAja! Ads
Source: Ciptadana
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Exhibit 21: EYE’s Billboard in SCBD Showing National Drugs Agency (BNN) Ads
Source: Ciptadana
SME to capture the latest advertising trend SME was founded by Mr. Ben Soebiakto who has a long track record in event and influencer management business. SME runs several businesses, spanning from film studio (called BASE Film Studio), social influencer management (Allstars.id and Famous.id), and events management (Wonderfest, IDEAFest, e-sports events). BASE Film Studio is a merger of three film companies: Salto Films, Million Pictures, and Kawi Content. Those three film companies already have a long track record in Indonesian film industry in producing well-known titles, such as: Garuda di Dadaku, Negeri 5 Menara, and Sang Penari. It is currently working with one of the top movie directors in Indonesia, Joko Anwar, in producing a movie called Impetigore (Perempuan Tanah Jahanam), a horror genre movie. After the conclusion of Impetigore, it will work on subsequent titles, also collaborating with Joko Anwar, on two other titles, namely ‘The Vow’ and ‘The Ghost in The Cell’.
SCMA is interested in social influencer business as it believes that influencer campaign marketing is the fastest growing segment within online advertising. According to SocialBuzz research, 65% of advertisers think that influencer marketing is perceived as an effective ads and it reported that c.39% of advertisers are looking to increase their social influencer ads budget. SME has two platforms on social influencers: Allstars.id and Famous.id. Allstars.id is a platform that connects brands/advertisers with the most suitable influencer to reach the desired audiences. Influencers targeted here are not the biggest ones, but they must have a decent followers count. Allstars.id provides analytical tools and data analytics to render its services. Famous.id, on the other hand, provides broader services, including creator network, content creator assistance, and aims the biggest influencers with million followers.
Exhibit 22: SocialBuzz Stats on Influencer Marketing
Source: SocialBuzz, SCMA, Ciptadana
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Exhibit 23: Allstars.id Clients
Source: Allstars.id, Ciptadana
On events management business, SME owns the IP to several of Indonesia’s leading events such as the well-known IDEAFest, WonderFest, ONOFF Festival and others. The Company also expects to run more e-sport events as e-sport is becoming more popular lately.
SME produced c.Rp300 bn revenue and was profitable in 2018.
SCMA’s other businesses Apart from the aforementioned new ventures that will be acquired later, SCMA already run other non-FTA-TV businesses, albeit they are still related to the core business. One of them is content production and distribution business under IEG as the holding company who owns several subsidiaries, catering to specific functions (Exh. 24).
Exhibit 24: IEG and its subsidiaries
Source: SCMA, Ciptadana
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Two notable subsidiaries are Sinemart and Screenplay Pictures. Sinemart is one of the leading production houses in Indonesia, competing tightly with MNC Pictures as the top FTA- TV contents producer. Sinemart currently has the exclusive rights to supply contents to SCTV and IVM’s prime time slots. Soap operas produced by Sinemart are very popular in the market and consistently score very high daily ratings (usually in the daily top-5).
Screenplay Pictures, on the other hand, produces cinema movies. Movie production industry is quite fragmented as the 7 largest players control 83.5% of market share in 2017. Based on filmindonesia.or.id data, Screenplay had 15% market share in 2017 although judging on the top chart movies (Exh. 27), we expect the number to be lower in 2018. 2019 YTD, Falcon’s Dilan 1991 sold the most tickets with 5.2mn. Two of Screenplay’s movies are on the top-15 chart with ‘Orang Kaya Baru’ and ‘Calon Bini’ selling 1.1mn and 221k tickets (the numbers are still rolling and could increase in the next data updates). Filmindonesia.or.id estimated that the average cinema ticket price in Indonesia was at Rp37k in 2017, which we believe haven’t changed much till now. We understand that the rule of thumb in the industry is the 50:50 profit sharing systems with cinema operators; therefore, we estimate Screenplay booked c.Rp25 bn from these two movies. Production costs vary greatly, with reports mentioning that ‘Gunung Emas Almayer’ and ‘The Raid’ could cost in the range of c.Rp50-60 bn, while typical comedy and romance movies’ costs could go as low as Rp1-5 bn. Aside from revenue sharing from cinema operators, other potential revenue stream could come from selling the movies to FTA-TV, VOD&OTT contents providers, or from sponsorships.
Exhibit 25: Movie Producers’ Market Share (in 2017)
17.9% MD Pictures 24.1% Falcon
5.8% Rapi Films Starvision
15.0% 13.7% Screenplay Hitmaker Others 11.6% 11.9%
Source: Filmindonesia.od.id, Ciptadana
Exhibit 26: Top Selling Movies in 2017
Est. revenue for Number of Rank Top Movie Title in 2017 Production house production Tickets Sold house (Rp bn) 1 Pengabdi Setan Rapi Films, CJ Entertainment 4,206,103 77.8 2 Warkop DKI Reborn: Jangkrik Boss Part 2 Falcon Company 4,083,190 75.5 3 Ayat Ayat Cinta 2 MD Pictures 2,840,159 52.5 4 Danur: I can See Ghosts Pichouse Films, MD Pictures 2,736,391 50.6 5 Jailangkung Screenplay Pictures, Legacy Pictures 2,550,271 47.2 6 Susah Sinyal Starvision 2,172,512 40.2 7 Surga yang Tak Dirindukan 2 MD Pictures 1,637,472 30.3 8 Mata Batin Hitmaker Studios 1,282,557 23.7 9 The Doll 2 Hitmaker Studios 1,226,864 22.7 10 Surat Cinta untuk Starla the Movie Screenplay Pictures, Legacy Pictures 1,218,317 22.5 11 Sweet 20 Starvision, CJ Entertainment 1,044,045 19.3 12 Critical Eleven Starvision, Legacy Pictures 881,530 16.3 13 London Love Story 2 Screenplay Pictures 862,874 16.0 14 Insya Allah Sah MD Pictures 833,010 15.4 15 Surat Kecil untuk Tuhan Falcon Pictures 715,361 13.2 Source: Filmindonesia.od.id, CiptadanaPlease see analyst certification and other important *: Reddisclosures highlight: at the Produced back of this by reportSCMA’s movie producers arm, Screenplay15 EQUITY RESEARCH SCMA - Company Update - 26 March 2019 CIPTADANA SEKURITAS ASIA
Exhibit 27: Top Selling Movies in 2018
Est. revenue for Number of Rank Top Movie Title in 2018 Production house production Tickets Sold house (Rp bn) 1 Dilan 1990 Falcon Pictures 6,315,664 116.8 2 Suzzanna: Bernapas dalam Kubur Soraya Intercine Films 3,346,185 61.9 3 Danur 2: Maddah MD Pictures 2,572,871 47.6 4 Si Doel the Movie Falcon Pictures 1,757,653 32.5 5 Asih MD Pictures 1,714,798 31.7 6 #Teman tapi Menikah Falcon Pictures 1,655,829 30.6 7 Milly & mamet: Ini Bukan Cinta & Rangga Starvision 1,563,188 28.9 8 Wiro Sableng: Pendekar Kapak Maut Naga Geni 212 Lifelike Pictures 1,552,014 28.7 9 Jailangkung 2 Screenplay Films, Legacy Pictures 1,498,635 27.7 10 A Man Called Ahok United Team of Art 1,465,145 27.1 11 Sabrina Hitmaker Studios 1,337,510 24.7 12 Kuntilanak MVP Pictures 1,236,000 22.9 13 Sebelum Iblis Menjemput Sky Media 1,122,187 20.8 14 Eiffel… I'm in Love 2 Soraya Intercine Films 1,008,392 18.7 15 Yowis Ben Starvision 935,622 17.3 Source: Filmindonesia.od.id, Ciptadana *: Red highlight: Produced by SCMA’s movie producers arm, Screenplay
Exhibit 28: Top Selling Movies in YTD 2019
Est. revenue for Number of Rank Top Selling Movie Title YTD 2019 Production house production Tickets Sold house (Rp bn) 1 Dilan 1991 Falcon Pictures, Max Pictures 5,192,103 96.1 2 Keluarga Cemara Visinema Pictures 1,701,498 31.5 3 Preman Pensiun MNC Pictures 1,147,469 21.2 4 Orang Kaya Baru Screenplay Pictures 1,118,738 20.7 5 DreadOut Goodhouse Production 831,150 15.4 6 Yowis Ben 2 Starvision 673,826 12.5 7 Mata Batin 2 Hitmaker Studios 569,515 10.5 8 Foxtrot Six MD Pictures, Rapid Eye 557,863 10.3 9 Satu Suro MD Pictures 400,318 7.4 10 Terlalu Tampan Visinema Pictures 323,883 6.0 11 Tembang Lingsir MD Pictures, Dee Company 306,744 5.7 12 Antologi Rasa Soraya Intercine Films 242,528 4.5 13 Calon Bini Screenplay Pictures 221,441 4.1 14 Tabu Starvision 205,261 3.8 15 Perjanjian dengan Iblis Pichouse Films, MD Pictures 158,460 2.9 Source: Filmindonesia.od.id, Ciptadana *: Red highlight: Produced by SCMA’s movie producers arm, Screenplay
Overall in 2018, IEG (consolidated) reported 5,600 hours of content productions (FTA-TV, OTT, and VOD), 6 box office titles, and 1 Netflix Original Movie. It also reported that its movies sold 4.7mn tickets in 2018, which we estimate should translate to c.Rp87 bn revenue-sharing from tickets.
Please see analyst certification and other important disclosures at the back of this report 16 EQUITY RESEARCH SCMA - Company Update - 26 March 2019 CIPTADANA SEKURITAS ASIA
Apart from contents producing arm, there is another subsidiary that we would like to highlight, which is Whisper Media (Whisper). Whisper is ‘digital brand integration’ (DBI) company which enables advertisers to place their brands directly into existing contents (TV shows, films, etc). It was established in 2011 and aims to deliver digital brand integration. SCMA acquired 50% of Whisper in 2014; SCMA is assumed as the non-controlling entity, therefore SCMA does not consolidate Whisper but records it under “investment in associated entities” account. However, a portion of Whisper’s gross revenue will be booked by SCMA (details below). In 2015, SCMA purchased 50% in Whisper’s Indonesian arm, PT Whisper Media (WM) with the ownership of 50%. SCMA also does not consolidate WM.
Whisper owns the technology to ‘geo-target’ to cater DBI and TV Contents. With the ’geo- target’ feature, it has several benefits compared to traditional ads: 1) it allows large advertisers to promote different products in different regions of Indonesia at the same time, on the same TV shows, 2) it allows smaller local or regional advertisers to target only the region in which they operate. In a nutshell, Whisper explores a whole new segment of advertisers to TV ad campaigns, and could potentially broaden SCMA’s revenue base. As depicted in Exhibit 29, the skim milk ads-board shown is actually added by Whisper, furthermore, the ads shown may differ across regions. The Company mentioned that it has already secured partnerships with more than 150 brands, some of which are global brands and integrate the ads with Whisper global operations. Whisper’s gross revenue is first paid to SCMA, in which SCMA will book 60% of it as ads revenue (blended with other ads revenue). The remaining 40% is attributed to Whisper. SCMA will also pay most of the direct production costs, amounting c.40% of revenue, while Whisper will recognize operating costs on its level. Further, SCMA will also recognize net gains/losses for its 50% investment in Whisper.
In 2018, the Company mentioned that Whisper recorded gross revenue of Rp210 bn, up by c.+60% YoY. Therefore, of the Rp210 bn, c.Rp126 bn will be booked by SCMA and the remaining c.Rp84 bn will go to Whisper’s book. The Company starts disclosing income from Whisper in more details since FY17 (Exh. 31). The Company eyes Rp275-325 bn gross revenue (implying c.30-55% YoY growth) with some margin expansions in 2019F.
Exhibit 29: Example of Whisper Ads
Source: SCMA, Ciptadana
Exhibit 30: Whispers’ Clients
Source: SCMA, Ciptadana
Please see analyst certification and other important disclosures at the back of this report 17 EQUITY RESEARCH SCMA - Company Update - 26 March 2019 CIPTADANA SEKURITAS ASIA
Exhibit 31: Whisper Financial Performance as per SCMA’s 9M18 Financial Statement
Comprehensive Year Companies Revenue (Rp bn) Income (Rp bn)
Whisper Media Pte. Ltd. 42.6 22.5 2017 PT Whisper Media 4.4 -4.0 Whisper Media Pte. Ltd. 44.3 24.4 9M18 PT Whisper Media 3.9 -6.0
Source: SCMA, Ciptadana
How will the acquisitions affect our numbers? The Company expects that the new companies (combined) will generate Rp900 bn revenue in 2019F on a full year basis. Since the share swaps with EMTK will be performed in May, perhaps the earliest possible consolidation is in June. SME adds more complication as we heard that the purchase may finish as early as April pending to regulatory process and consolidation may occur in May. The Company eyes 10-15% net margin from the new digital business with margin is expected to improve every year thanks to higher operating leverage. Given the limited disclosures thus far, we have not incorporated the numbers to our forecasts. The Company mentioned that it will disclose the new business segments in details in the earliest full reporting period after the consolidation take place which we expect should be fully disclosed in 9M19F report. On capex, the Company does not expect significant hikes in capex upon consolidation.
Again, at this juncture, we keep the new digital assets out of our forecasts. We provide a proforma simulation below to roughly illustrate the impacts. Some of our assumptions in our proforma scenario include: a) Swap share with EMTK will complete in May-19 and full consolidation take place in June-19 b) We fully consolidate SME in May-19 (we assume SCMA to consolidate SME) c) Revenues are based on the Company’s hints. We assume 30% revenue growth p.a. We also assume net margin of 10% for all aggregates company in 2019F and 12.5% in 2020F. We assume Vidio.com will book Rp80 bn revenue in 2019F, derived from c.133k of premium subscribers d) Minority portion: 0% in Video, 49% in KLY, 40% in EYE, and 50% in SME e) 132.05mn new share issuance to complete the transaction with EMTK
Our proforma analysis shows that the contribution of the new ventures will not be significant in 2019F as we only forecast a Rp31 bn of NPAT’s contribution (1.8% of our forecasts without the acquisition). We estimate the deal will be slightly accretive to EPS by c.1%. More meaningful contribution is expected in 2020F as we expect c.3.4% of EPS accretion from the transactions. The Company eyes c.30% revenue growth p.a with continuous margin expansion on the new businesses and expects to see 45% and 35% of revenue and net profit contribution, respectively, to SCMA within three years, which appears quite aggressive based on our proforma scenario.
We will begin to incorporate the digital assets in our forecasts once we have received more clarity and detailed numbers on the respective companies.
Please see analyst certification and other important disclosures at the back of this report 18 EQUITY RESEARCH SCMA - Company Update - 26 March 2019 CIPTADANA SEKURITAS ASIA
Exhibit 32: SCMA’s Proforma Financial Numbers Upon Consolidating Digital Assets
Revenue 2018F 2019F 2020F
FTA-TV 5,930 6,343 6,833 Others (largely IEG) 221 309 418 Deduction (1,175) (1,328) (1,501) Total Existing (FY) 4,975 5,324 5,750 Vidio - 80 104 KLY 250 300 390 EYE 100 130 169 SME 300 390 507 Total New Ventures (FY) 650 900 1,170
NPAT (FY) Existing 1,555 1,707 1,879 New ventures 40 90 146
Consolidation to SCMA Revenue - 558 1,170 NPAT - 56 146 NPAT after minority 31 82
SCMA after consolidation Revenue 4,975 5,882 6,920 % Diff. to our initial forecast 0.0% 10.5% 20.3% NPAT 1,555 1,738 1,961 % Diff. to our initial forecast 0.0% 1.8% 4.4% EPS 106.3 117.8 132.9 % Dillutive/Accretive 0.0% 1.0% 3.4%
Revenue contribution: Existing 100.0% 90.5% 83.1% New 0.0% 9.5% 16.9%
NPAT contribution: Existing 100.0% 98.2% 95.8% New 0.0% 1.8% 4.2%
Net margin: before consolidating 31.2% 32.1% 32.7% after consolidating 31.2% 29.6% 28.3% Source: SCMA, Ciptadana
Please see analyst certification and other important disclosures at the back of this report 19 EQUITY RESEARCH SCMA - Company Update - 26 March 2019 CIPTADANA SEKURITAS ASIA
FTA-TV remains to be the cash cow As the existing business will still generate >90% of the revenue, we believe FTA-TV will still be paramount to SCMA. Recent audience share data points to a solid outlook for SCMA. Albeit a slight (-30bps MoM) decline in all-time audience share, the more important prime-time segment recorded +120bps improvement. Our recent daily rating tracker reveals that in March-19, SCMA shall gain more shares in prime-time segment as ‘Cinta Suci’ consistently ranked as the top rated show in Indonesia, a bounce-back after it was dethroned in Jan-19 to mid Feb-19 by MNCN’s ‘Cinta yang Hilang’. On top of ‘Cinta Suci’, SCTV also has a new soap opera called ‘Cinta Buta’ which was premiered in Feb-19 and has since gained attraction very quickly and now is in the top three daily ratings. We like how SCMA promptly responded to its weakening prime-time ratings in Dec and Jan by launching a new title and reshuffling screening time for some of its shows.
Exhibit 33: All-time Audience Share by Group 35.3 35.0
30.0 31.5 25.0
20.0 15.4 15.0 14.6 10.0
5.0 3.2
0.0 Jul'17 Jul'18 Oct'17 Oct'18 Jan'17 Jan'18 Jan'19 Apr'17 Apr'18 Jun'17 Jun'18 Feb'17 Feb'18 Feb'19 Dec'17 Dec'18 Sep'18 Nov'17 Nov'18 Aug'17 Aug'18 Mar'17 Mar'18 May'17 May'18 Sept'17
SCMA MNCN VIVA Trans Others Source: Nielsen, SCMA, Ciptadana
Exhibit 34: Prime-time Audience Share by Group 45.0
40.0 37.3 35.0 30.0 33.2 25.0 20.0 15.0 13.8 10.0 12.6 5.0 3.1 0.0 Jul'17 Jul'18 Oct'17 Oct'18 Jan'17 Jan'18 Jan'19 Apr'17 Apr'18 Jun'17 Jun'18 Feb'17 Feb'18 Feb'19 Dec'17 Dec'18 Sep'18 Nov'17 Nov'18 Aug'17 Aug'18 Mar'17 Mar'18 May'17 May'18 Sept'17
SCMA MNCN VIVA Trans Others
Source: Nielsen, SCMA, Ciptadana
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Exhibit 35: Non-Prime-Time Audience Share by Group 35.0 34.2
30.0 30.4 25.0
20.0 17.0 15.0 15.1 10.0
5.0 3.3
0.0 Jul'17 Jul'18 Oct'17 Oct'18 Jan'17 Jan'18 Jan'19 Apr'17 Apr'18 Jun'17 Jun'18 Feb'17 Feb'18 Feb'19 Dec'17 Dec'18 Sep'18 Nov'17 Nov'18 Aug'17 Aug'18 Mar'17 Mar'18 May'17 May'18 Sept'17
SCMA MNCN VIVA Trans Others
Source: Nielsen, SCMA, Ciptadana
Valuation and recommendation The Company mentioned that 2019 is a little bit unpredictable as it expects the outcome of elections may affect advertisers’ behavior. Improving purchasing power and peaceful election may be the key for drivers for brands to advertise more. The Company expects 5% revenue growth in 1Q19, while the guidance for the remaining of the years will be available later. The Company expects 12% revenue growth in 2018F with the relatively high costs in 4Q18F. As such, we tweak our revenue forecasts and lower our margin assumptions to align to the guidance. Furthermore, we expect 7.0% revenue growth in 2019F as our base case scenario penciled-in improving consumptions with a serene election; hence we expect advertising revenue to accelerate post election onward. As for the direct impact from the election ads itself, we expect this year will be relatively muted as KPU has stipulated the regulation to limit political ads in FTA-TV until three weeks before the election date. We forecast +90bps net margin expansion in 2019F, resulting in a net margin of 32.1% as we see lower programming costs attributed to high base in 2018F due to Asian Games. We now estimate 9.8% EPS growth in 2019F.
Exhibit 36: Forecast Changes Parameters Previous New Changes 2018F 2019F 2020F 2018F 2019F 2020F 2018F 2019F 2020F Revenue 4,879 5,304 5,784 4,975 5,324 5,750 2.0% 0.4% -0.6% Gross profit 2,962 3,214 3,563 2,948 3,205 3,499 -0.5% -0.3% -1.8% Operating profit 2,123 2,328 2,655 2,053 2,247 2,481 -3.3% -3.5% -6.5% Net profit 1,608 1,769 2,010 1,555 1,707 1,879 -3.3% -3.5% -6.5%
Gross margin 60.7% 60.6% 61.6% 59.3% 60.2% 60.9% Operating margin 43.5% 43.9% 45.9% 41.3% 42.2% 43.2% Net margin 33.0% 33.3% 34.7% 31.2% 32.1% 32.7% Source: SCMA, Ciptadana
Please see analyst certification and other important disclosures at the back of this report 21 EQUITY RESEARCH SCMA - Company Update - 26 March 2019 CIPTADANA SEKURITAS ASIA
To get a better context of the recent de-ratings of SCMA, we draw comparisons to regional media companies. It is apparent that the media industry is facing a severe de-rating across the boards. The Companies under our observations de-rated by 29-81% (bottom valuation vs. peak) (Exh. 38), whereas SCMA de-rated by 56.1% vs. its peak in 2015. We think the industry is heading to a new normal of valuation due to the structural change in the business. While we do not expect to see SCMA to trade back at 30x PER multiple, current valuation at 14.6x 2019F PER is undervalue, we believe, based on two angles. Firstly, against regional peers, SCMA trades at a multiple below the regional average of 17.6-18.4x (depend on averaging method, Exh. 39), which we believe is unjustified given its better profitability profile (ROE of 33.5% vs. peers: 15-16%), solid corporate governance, and its status as the second largest FTA-TV business in the country. Secondly, against its own historical valuation, 14.6x is near to -2SD below its 5-year historical average. One might argue that SCMA’s 2019F earnings growth is below the regional average. However we believe it was mostly attributed to the high base in 2018F (+16.8% YoY). We argue the stock warrants higher multiple as we expect earnings growth should return to the level of c.10% in 2019-20F. Potential rerating catalysts are solid earnings delivery, robust monthly audience share data, and sleek execution on its new digital companies. We now pegged SCMA to 17.6x 2019F PER, inline with the regional average, leading us to our BUY call with TP of Rp2,050. At our TP, the stock only trades near to -1.5SD of its 5-year-average.
Exhibit 37: SCMA PER Band
Source: Bloomberg, SCMA, Ciptadana
Please see analyst certification and other important disclosures at the back of this report 22 EQUITY RESEARCH SCMA - Company Update - 26 March 2019 CIPTADANA SEKURITAS ASIA
Exhibit 38: Regional Media Companies PER Band
Please see analyst certification and other important disclosures at the back of this report 23 EQUITY RESEARCH SCMA - Company Update - 26 March 2019 CIPTADANA SEKURITAS ASIA
Source: Bloomberg, Respective Companies, Ciptadana
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Exhibit 39: Regional Media Comparison Table Surya Citra Media Citra Surya Average Weighted Cap Market Average Simple Citra Nusantara Media Holdings TV Tokyo Broadcasting System Holdings Tokyo Holdings Television Nippon CJ EM Corp Broadcasts Television Huayi BrothersCorp Media Visual China Group Huace Zhejiang Film & TV Beijing CoEnlight Media Network GMA Corp ABS-CBN TV Network Today India Entertainment Network AstroHoldings Malaysia Name Company SCMA IJ SCMA IJ MNCN 9413 JT 9401 JT 9404 JT 035760 KS 511 HK 300027 CH 000681 CH 300133 CH 300251 CH PM GMA7 PM ABS INTVTN ENIL IN MK ASTRO Ticker Bloomberg (lcc) Px Current 219,500 319.55 520.80 1,710 2,354 2,029 1,661 15.10 26.91 21.20 5.58 8.08 8.81 5.73 1.49 750 Cap (USD Cap Market 1,761.4 3,218.5 3,978.7 4,244.3 2,323.0 2,808.1 2,134.2 3,849.7 1,909.9 mn) 754.2 615.2 842.7 367.0 348.1 276.5 360.1 2019F 14.6 18.4 17.6 16.7 16.8 11.3 16.5 11.5 16.0 37.6 16.7 23.9 13.3 49.2 13.4 6.6 9.1 5.8 P/E (x) P/E 2020F 13.3 15.9 14.9 15.8 18.2 11.3 14.3 10.3 13.5 29.6 13.3 19.1 11.7 11.3 31.1 11.7 6.1 6.1 2019F Revenue growth Revenue 15.6% 12.4% 36.9% 11.3% 18.5% 21.8% 15.8% 27.6% 10.9% 19.1% -0.2% 7.0% 4.2% 2.4% 1.4% 0.3% 8.9% 7.7% 2020F 10.5% 14.2% 29.6% 19.7% 21.7% 15.1% -3.8% 8.0% 8.5% 4.9% 1.4% 1.2% 1.4% 6.1% 5.1% 1.9% 8.9% 0.6% 2019F -33.5% -51.9% -24.1% 14.1% 16.5% 16.1% 24.0% 79.8% 16.7% 29.3% 30.5% 34.0% 48.2% 21.1% 40.7% -0.3% EPS growth EPS 9.8% n.m 2020F -10.0% -22.2% -13.2% 10.1% 10.3% 10.4% 15.5% 11.5% 27.1% 25.2% 24.5% 15.6% 63.4% -0.9% -5.5% 9.9% 5.4% 9.1% 2019F ROE 33.5% 15.8% 16.6% 14.9% 10.9% 15.0% 21.1% 31.4% 20.0% 85.4% 5.0% 3.7% 5.4% 8.5% 8.0% 7.7% 5.9% 5.7% Div. Yield Div. 2019F 14.5% 11.3% 10.1% 4.3% 5.3% 4.8% 1.7% 1.6% 4.9% 8.7% 0.5% 0.5% 0.5% 1.2% 0.3% 7.1% n.a n.a
Source: Bloomberg, Respective Companies, Ciptadana
Please see analyst certification and other important disclosures at the back of this report 25 EQUITY RESEARCH SCMA - Company Update - 26 March 2019 CIPTADANA SEKURITAS ASIA
Exhibit 40 - Income Statement
Year to 31 Dec (Rpbn) 2016A 2017A 2018F 2019F 2020F Revenue 4,524 4,454 4,975 5,324 5,750 COGS -1,782 -1,835 -2,027 -2,119 -2,251 Gross profit 2,742 2,619 2,948 3,205 3,499 Oper. expenses -738 -847 -896 -958 -1,018 Oper. profit 2,003 1,772 2,053 2,247 2,481 EBITDA 2,133 1,957 2,201 2,405 2,651 Interest income 47 15 16 17 19 Interest expense -29 -16 -19 -22 -26 Other income (exp.) -1 11 6 9 8 Pre-tax profit 2,021 1,782 2,057 2,251 2,482 Income tax -510 -464 -504 -551 -608 Minority interest -10 14 2 8 5 Net profit 1,501 1,331 1,555 1,707 1,879
Exhibit 41 - Balance Sheet
Year to 31 Dec (Rpbn) 2016A 2017A 2018F 2019F 2020F Cash & cash equivalent 455 234 741 1,214 1,688 Acct, receivables 1,484 1,530 1,588 1,699 1,835 Inventory 689 766 682 686 740 Other curr, asset 324 179 276 302 325 Total current asset 2,952 2,709 3,287 3,901 4,589 Fixed assets - net 967 1,029 1,121 1,219 1,324 Other non-curr.asset 604 1,335 1,429 1,441 1,456 Total asset 4,821 5,386 6,147 6,877 7,690
ST debt + curr. maturity 207 65 74 89 102 Acct, payable 246 298 258 270 287 Advances received 0 0 0 0 0 Other curr. liab 538 381 626 649 683 Long term debt 0 0 0 0 0 Other non-curr, liab, 125 237 165 167 169 Total liabilities 1,115 980 1,124 1,175 1,241 Shareholder equity 3,427 3,901 4,469 5,092 5,778 Minority interest 279 504 555 610 671 Total liab + SHE 4,821 5,386 6,147 6,877 7,690
Exhibit 42 - Per Share Data
Year to 31 Dec(Rp) 2016A 2017A 2018F 2019F 2020F EPS 102.7 91.1 106.3 116.7 128.5 BVPS 234.3 266.8 305.6 348.2 395.2 DPS 83.0 58.0 67.7 74.4 81.8 FCF per share 74.4 35.2 98.0 101.6 108.7
Source : SCMA, Ciptadana Estimates
Please see analyst certification and other important disclosures at the back of this report 26 EQUITY RESEARCH SCMA - Company Update - 26 March 2019 CIPTADANA SEKURITAS ASIA
Exhibit 43 - Cash Flow
Year to 31 Dec (Rpbn) 2016A 2017A 2018F 2019F 2020F Net income 1,501 1,331 1,555 1,707 1,879 Depreciation 129 185 148 159 170 Chg in working cap. -267 -9 61 -106 -164 Other -5 -208 -64 -68 -73 CF-Oper activities 1,358 1,300 1,700 1,691 1,812
Capital expenditure -129 -40 -176 -189 -202 Others -141 -746 -91 -18 -21 CF-Investing activities -270 -786 -268 -206 -222
Net change in debt -110 -104 11 17 15 Net change in equity 0 0 0 0 0 Dividend payment -1,214 -848 -990 -1,087 -1,197 Other financing 4 217 53 59 65 CF-Financing activities -1,319 -735 -925 -1,012 -1,116
Net cash flow -231 -221 508 473 473 Cash - begin of the year 686 455 234 741 1,214 Cash - end of the year 455 234 741 1,214 1,688
Exhibit 44 - Key Ratios
Year to 31 Dec 2016A 2017A 2018F 2019F 2020F Growth Revenue (%) 6.8 -1.6 11.7 7.0 8.0 Operating profit (%) -0.6 -11.5 15.8 9.4 10.4 Net profit (%) -1.5 -11.3 16.8 9.8 10.1 Profitability Ratios Gross margin (%) 60.6 58.8 59.3 60.2 60.9 Operating margin (%) 44.3 39.8 41.3 42.2 43.2 EBITDA margin (%) 47.1 43.9 44.2 45.2 46.1 Net margin (%) 33.2 29.9 31.2 32.1 32.7 ROA (%) 31.1 24.7 25.3 24.8 24.4 ROE (%) 43.8 34.1 34.8 33.5 32.5 Liquidity Ratios Current ratio (x) 3.0 3.6 3.4 3.9 4.3 Quick ratio (x) 2.3 2.6 2.7 3.2 3.6 Cash conversion cycle (days) 240.5 253.7 216.7 212.7 214.6 Activity Ratio Inventory turnover (days) 141.1 152.4 122.7 118.1 120.1 Receivable turnover (days) 115.6 123.5 114.4 112.7 112.2 Payable turnover (days) 16.2 22.3 20.4 18.1 17.7 Solvency Ratio Interest cover (x) 74.7 122.0 118.3 108.1 103.8 Debt to equity ratio (x) 0.1 0.0 0.0 0.0 0.0 Net debt to equity (x) Net Cash Net Cash Net Cash Net Cash Net Cash
Source : SCMA, Ciptadana Estimates
Please see analyst certification and other important disclosures at the back of this report 27 EQUITY RESEARCH SCMA - Company Update - 26 March 2019 CIPTADANA SEKURITAS ASIA
EQUITY RESEARCH
HEAD OF RESEARCH ANALYST ANALYST Arief Budiman Erni Marsella Siahaan, CFA Yasmin Soulisa Strategy, Automotive, Heavy Equipment, Banking Property, Plantations Construction, Oil & Gas T +62 21 2557 4800 ext 919 T +62 21 2557 4800 ext 799 T +62 21 2557 4800 ext 819 E [email protected] E [email protected] E [email protected]
ECONOMIST ANALYST ANALYST Imanuel Reinaldo Fahressi Fahalmesta Stella Amelinda T +62 21 2557 4800 ext 820 Cement, Toll Road, Poultry Consumer, Cigarette E [email protected] T +62 21 2557 4800 ext 735 T +62 21 2557 4800 ext 740 E [email protected] E [email protected]
ANALYST ANALYST ANALYST Robert Sebastian Thomas Radityo Gani Retail, Healthcare Coal, Metal Mining Telco, Tower, Media T +62 21 2557 4800 ext 760 T +62 21 2557 4800 ext 739 T +62 21 2557 4800 ext 734 E [email protected] E [email protected] E [email protected]
TECHNICAL ANALYST RESEARCH ASSISTANT Trevor Gasman Sumarni T +62 21 2557 4800 ext 934 T +62 21 2557 4800 ext 920 E [email protected] E [email protected]
EQUITY SALES
Co HEAD OF INSTITUTIONAL SALES Co HEAD OF INSTITUTIONAL SALES Dadang Mulyana The Fei Ming Plaza ASIA Office Park unit 2 Plaza ASIA Office Park unit 2 Jl. Jend. Sudirman Kav. 59 Jl. Jend. Sudirman Kav. 59 Jakarta - 12190 Jakarta - 12190 T +62 21 2557 4800 ext 838 T +62 21 2557 4800 ext 807 F +62 21 2557 4900 F +62 21 2557 4900 E [email protected] E [email protected]
SURABAYA BRANCH OFFICES
JAKARTA - MANGGA DUA JAKARTA - PURI KENCANA SURABAYA Komplek Harco Mangga Dua Perkantoran Puri Niaga III Intiland Tower Surabaya Rukan Blok C No.10 Jl. Puri Kencana Blok M8 No.2E Ground Floor Suite 5 & 6 Jl. Mangga Dua Raya Kembangan Jl. Panglima Sudirman 101-103 Jakarta - 10730 Jakarta - 11610 Surabaya - 60271 T +62 21 600 2850 T +62 21 5830 3450 T +62 31 534 3938 F +62 21 612 1049 F +62 21 5830 3449 F +62 31 534 3886
Please see analyst certification and other important disclosures at the back of this report 28 EQUITY RESEARCH SCMA - Company Update - 26 March 2019 CIPTADANA SEKURITAS ASIA
Analyst Certification
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