Indonesia Initiating Coverage
8 September 2020 Communications | Media Media Nusantara Citra (MNCN IJ) Buy
Laggard Integrated Media Market Leader; BUY Target Price (Return): IDR1,640 (+91%) Price: IDR860 Market Cap: USD867m Avg Daily Turnover (IDR/USD) 94,704m/6.59m
Initiate coverage on our sector Top Pick, Media Nusantara Citra, with Analysts a BUY and IDR1,640 TP, 91% upside and c.3% yield. As Indonesia’s largest integrated media company, it is backed by a gradual recovery in ad Indonesia Research Team spend, supported by NTC ads and special events revenue; multiple +6221 5093 9888 initiatives in digital revenue to ramp up advertisement revenue; maintained [email protected] margins due to cost savings with upside from lower interest expense and tax; as well as laggard valuation despite still decent ROE vs its peers. Gradual recovery in ad spend, supported by NTC and special events. After a drop in 2Q, we expect a gradual recovery in 2H20F with early signs
showing volume pick up from fast moving consumer goods (FMCGs). Even during the large scale social restrictions (PSBB), MNCN fared better vs Share Performance (%) peers due to its kept audience share, with 90% of production still ongoing in support of new episodes airings. It was still able to book NTC ads that YTD 1m 3m 6m 12m sold at 2x regular ad rates as they are fully customisable. We believe Absolute (47.2) (3.4) (13.1) (33.3) (33.6) revenue from special events and NTC ads should fill the gap from the Relative (30.4) (5.3) (19.0) (28.6) (16.6) volume drop in regular spots. 52-wk Price low/high (IDR) 790 – 1,750 Digital ads: 50% of revenue by 2024F. Although free-to-air (FTA) TV is
still the key revenue generator, management is optimistic that digital media Media Nusantara Citra (MNCN IJ) will contribute 50% of revenue by 2024. This will mainly be driven by its Price Close Relative to Jakarta Composite Index (RHS) RCTI+ over-the-top (OTT) platform gaining traction and monthly active 1,890 146
users (MAUs), with plans to expand features. Currently, the largest 1,690 134 contributor to digital ads still comes from YouTube (c.30% of total). MNCN is also planning similar partnerships with Facebook and TikTok. A JV or 1,490 123 M&A in its OTT platform may possibly boost value – similar to its cancelled 1,290 111
venture with Chinese streaming firm IQIYI last year – especially with the 1,090 99 increasing number of investments in OTT globally. Disney+ & Netflix – content business driver. As more OTT platforms 890 88
become available in Indonesia, this should benefit MNCN’s content 690 76
Jul-20 Jul-20
Oct-19 Apr-20 Apr-20
business. The company’s content revenue surged 54% YoY in 2Q20 (+77% Oct-19
Jun-20 Jan-20 Jan-20 Jun-20
Feb-20 Feb-20 Mar-20 Mar-20
Nov-19 Dec-19 Dec-19
Sep-19 Sep-19 Aug-20 Aug-20 in 1H20). It is also not likely to be a one-off transaction. Its vast content May-20 library, especially animation, is perfect for Disney+. Source: Bloomberg
Margins maintained despite lower volume. Despite the drop in topline from lower volume in 2Q20, the company was able to keep GPM flat at 63% for 2Q20 (1Q20: 63%) and 62% for 1H20 (1H19: 63%) due to the savings in direct costs as a majority of its production was shifted to its own studios. Additional upside for margin in FY21 lies in the lower tax rate (incentive for listed companies with >40% free float) and lower interest expense (targeting to lower long-term debt by IDR1trn – c.25% of total). Huge valuation gap to SCMA. MNCN is currently trading at 5x P/E, far below SCMA’s 13x FY21F P/E (c.61% discount) which in our view, is too great of a disparity. MNCN does tend to trade at a discount to its peer, SCMA due to its lower ROE and higher debt profile. However, at current estimates, MNCN’s ROE is only 15% lower than SCMA’s. We set our TP for MNCN at 10x 2020F P/E, or c 30% discount from SCMA’s. Risks: ad spend, cancellation of partnerships, and weakening of the IDR.
Forecasts and Valuation Dec-18 Dec-19 Dec-20F Dec-21F Dec-22F Total turnover (IDRb) 7,444 8,353 8,064 9,252 9,940 Recurring net profit (IDRb) 1,531 2,233 1,973 2,578 2,720 Recurring net profit growth (%) 5.4 45.8 (11.7) 30.7 5.5 Recurring P/E (x) 8.02 5.77 6.85 5.24 4.97 P/B (x) 1.2 1.2 1.0 0.9 0.8 P/CF (x) 40.13 na 13.64 19.93 15.69 Dividend Yield (%) 1.7 1.6 3.3 2.9 3.8 EV/EBITDA (x) 3.23 2.70 2.48 1.74 1.26 Return on average equity (%) 16.2 20.8 15.8 17.8 16.3 InterestNet debt cover to equity (x) (%) 7.77 34.2 7.47 29.1 6.98 16.7 10.94 7.8 11.49 0.3
Source: Company data, RHB
See important disclosures at the end of this report 1
Media Nusantara Citra Indonesia Initiating Coverage
8 September 2020 Communications | Media
Financial Exhibits
Asia Financial summary (IDR) Dec-18 Dec-19 Dec-20F Dec-21F Dec-22F Indonesia Recurring EPS 107.27 148.99 125.62 164.15 173.20 Communications DPS 14.66 13.64 28.44 25.12 32.83 Media Nusantara Citra BVPS 691.07 740.57 852.39 991.42 1,131.78 MNCN IJ Return on average equity (%) 16.2 20.8 15.8 17.8 16.3 Buy Valuation metrics Dec-18 Dec-19 Dec-20F Dec-21F Dec-22F Valuation basis Recurring P/E (x) 8.02 5.77 6.85 5.24 4.97 10x P/E P/B (x) 1.2 1.2 1.0 0.9 0.8 FCF Yield (%) (3.7) (10.7) 2.9 0.6 1.9 Key drivers Dividend Yield (%) 1.7 1.6 3.3 2.9 3.8 i. Gradual recovery in ad spend, supported by NTC EV/EBITDA (x) 3.23 2.70 2.48 1.74 1.26 ads and special events EV/EBIT (x) 3.74 3.07 2.89 2.01 1.46 ii. Kept margins from controlled programming costs
iii. lower interest rates and tax rates Income statement (IDRb) Dec-18 Dec-19 Dec-20F Dec-21F Dec-22F Key risks Total turnover 7,444 8,353 8,064 9,252 9,940 Gross profit 4,619 5,323 5,162 5,924 6,349 i. Lower than expected ad spend ii. Foreign currency risk on USD denominated debt EBITDA 3,177 3,713 3,540 4,140 4,368 iii. Regulatory risk regarding migration to digital TV Depreciation and amortisation (437) (454) (507) (561) (610) and potential licensing fee regulation change Operating profit 2,740 3,259 3,034 3,580 3,758 Net interest (323) (412) (410) (301) (301) Company Profile Pre-tax profit 2,104 2,939 2,724 3,386 3,572 Media Nusantara Citra is an integrated media company Taxation (498) (587) (627) (677) (714) with businesses including; FTA TV, content production, newspaper, radio stations, magazines and online Reported net profit 1,531 2,233 1,973 2,578 2,720 Recurring net profit 1,531 2,233 1,973 2,578 2,720 portals, and OTT streaming platform
Cash flow (IDRb) Dec-18 Dec-19 Dec-20F Dec-21F Dec-22F Change in w orking capital (773) (630) 239 (608) (496) Cash flow from operations 306 (124) 990 678 861 Capex (763) (1,259) (600) (600) (600) Cash flow from investing activities (763) (1,259) (600) (600) (600) Dividends paid (209) (214) (447) (395) (516) Cash flow from financing activities 709 37 445 563 601
Cash at beginning of period 469 720 631 1,564 2,471 Net change in cash 251 (1,346) 835 640 862 Ending balance cash 720 (626) 1,465 2,204 3,333
Balance sheet (IDRb) Dec-18 Dec-19 Dec-20F Dec-21F Dec-22F Total cash and equivalents 987 885 2,064 2,971 4,117 Total investments 6,443 7,552 8,152 8,752 9,352 Total assets 16,340 17,836 19,641 21,797 24,065 Short-term debt 1,387 1,656 1,656 1,656 1,656 Total long-term debt 3,241 2,877 2,813 2,613 2,513 Total liabilities 5,697 5,311 5,234 5,076 5,001 Total equity 10,642 12,526 14,407 16,721 19,064 Total liabilities & equity 16,340 17,836 19,641 21,797 24,065
Key metrics Dec-18 Dec-19 Dec-20F Dec-21F Dec-22F Revenue grow th (%) 5.5 12.2 (3.5) 14.7 7.4 Recurrent EPS grow th (%) 5.4 38.9 (15.7) 30.7 5.5 Gross margin (%) 62.0 63.7 64.0 64.0 63.9 Operating EBITDA margin (%) 42.7 44.5 43.9 44.8 43.9 Net profit margin (%) 20.6 26.7 24.5 27.9 27.4 Dividend payout ratio (%) 13.7 9.6 22.6 15.3 19.0 Capex/sales (%) 10.3 15.1 7.4 6.5 6.0 Interest cover (x) 7.77 7.47 6.98 10.94 11.49
Source: Company data, RHB
See important disclosures at the end of this report 2
Media Nusantara Citra Indonesia Initiating Coverage
8 September 2020 Communications | Media Investment Thesis BUY: laggard pick for a recovery story Initiate coverage with a BUY and 12-month IDR1,640 TP, 91% upside and c.3% yield. MNCN is our sector Top Pick. After a drop in 2Q ad spend, we expect a recovery in 2H20F with early signs showing volume pick up from international FMCG companies, supported by several special live events and sponsorship programmes in the pipeline. Even during the PSBB, MNCN fared better compared to peers due to its kept audience share (with 90% of production still ongoing, supporting new episodes airings).Hence, it was still able to book NTC ads. Although FTA still remains as the backbone of the company’s topline (80%), digital initiatives are already in place, with a target of 40% contribution by 2024. Its digital ad segment registered +27% QoQ in 2Q20 and +26% YoY in 1H20. We believe this segment has the potential to ramp up from 2021. However, despite decent 2Q20 results, MNCN is still trading at an attractive 5x P/E, at -1SD from its mean and at a 61% discount to SCMA. We are initiate BUY with the thesis of: i. Gradually recovering ad spend supported by NTC ads and special event revenue; ii. Multiple initiatives in digital revenue to ramp up advertisement revenue; iii. Maintained margins from cost savings with upside from lower interest expense and tax; iv. Laggard valuation despite its still decent ROE profile compared to peers. As such, we believe MNCN is be fairly valued at 10x 2020F P/E (-0.5SD from its 5-year mean) of FY21F EPS, implying a TP of IDR1,800.
Awaiting recovery in ad spend After a sharp drop in volume in 2Q (we estimate mid-teens volume drop), we expect a gradual recovery in 2H20F, led by FMCGs resuming their ad spend, especially international firms that withheld their spending in May-June. This is also supported by multiple special /sponsor-based events to attract more revenue, as well as its leading NTC ads. However, despite plans of ad rate revitalisation in early 2020, and a 10% increase in ad rates for selected FMCG players in 1Q20, we believe there is a risk of lower ad rates for the remainder of the year. For FY21F however, with competition from SCMA less intensified, we do not rule out the resumption of an increase in ad rates, which could lead to mid-single to mid-teens growth. This is based on a long overdue recovery in ad rates – during the past five years, MNCN’s blended ad rates only grew by a CAGR of 3.2% due to competition with SCMA – holder of the second-largest market share.
Figure 1: Blended ad rate growth (IDRm) 45 7% 6% 40 Blended ad rates during the past five 5% 35 years only grew by a CAGR of 3.2%. 4% This was due to competition from the 30 3% second largest market share holder, 25 2% SCMA 20 1% Now that competition is healthier, both 0% MNCN and SCMA may increase prices 15 -1% to catch up to the higher-priced rates in 10 -2% neighbouring countries 5 -3% Although we expect flattish ad rate 0 -4% growth for FY20F, we do not rule out a 2015 2016 2017 2018 2019F 2020F 2021F resumption of an increase in ad rates in 2021F Blended Ad Rates (LHS) YoY Growth (RHS, %)
Source: Company data, RHB
See important disclosures at the end of this report 3
Media Nusantara Citra Indonesia Initiating Coverage
8 September 2020 Communications | Media
#1 audience share: supported by production during the PSBB Supported by its three FTA TV channels – Rajawali Citra Televisi Indonesia (RCTI), MNCTV, and GTV – MNCN averaged 34.4% audience share in prime time and 34.3% in all time. With both audience share time slots in pole position, it is neck and neck with its direct competitor, SCMA, which is trailing in second place with 32.3% and 33.1% in prime-time and all-time audience share. Due to its lead in audience share, MNCN now controls ad spend share of c.46% among other FTA TV channels. The company was able to maintain its pole position especially during the PSBB as it was the only FTA TV channel that aired new content, managing to keep 90% of production running. On the other hand, SCMA depended on reruns.
Figure 2: Prime-time audience share (18.00-22.59) Figure 3: All-time audience share (2.00-22.59) (%) Prime-time Audience Share (%) All-time Audience Share
40 40
35 35 33.6 33.6 33.1 33.2 30 30
25 25
20 20 16.4 16.5 15 15 13.9 13.8 10 10 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20
SCMA MNCN Trans VIVA SCMA MNCN Trans VIVA
Source: Nielsen, Company data, RHB Source: Nielsen, Company data, RHB
According to management, audience share data to ad spend allocation typically has a 2-3 month lag. With its maintained robust audience share, 3Q20F ad revenue should also remain strong. However, 2Q20 numbers were a bit different, understandably due to unforeseen circumstances from the COVID-19 pandemic, which led to lower ad spend. However, as ad spend should gradually recover, its robust audience share should translate well to a healthy allocation in 3Q20.
Figure 4: MNCN’s quarterly revenue and audience share
2,400 50.0%
2,200 45.0% 2,000 40.0% Looking at the comparison between 1,800 audience share data, the quarterly revenue generated usually follows the 1,600 35.0% trend with a lag 1,400 This excludes extraordinary revenue 30.0% during the election years, as seen in 1,200 1H14 and 1H19
1,000 25.0%
Jun-15 Jun-16 Jun-19 Jun-20 Jun-13 Jun-14 Jun-17 Jun-18
Mar-15 Mar-16 Mar-19 Mar-20 Mar-13 Mar-14 Mar-17 Mar-18
Dec-14 Dec-15 Dec-18 Dec-19 Dec-13 Dec-16 Dec-17
Sep-15 Sep-16 Sep-18 Sep-19 Sep-13 Sep-14 Sep-17
MNCN Quarterly Revenue MNCN Audience Share
Source: Nielsen, Company data, RHB
See important disclosures at the end of this report 4
Media Nusantara Citra Indonesia Initiating Coverage
8 September 2020 Communications | Media
Top rated dramas, talent searches, and special events MNCN’s robust audience share numbers were supported by its specialty programmes – soap operas (sinetron) and talent searches. As previously stated, the company’s sinetron programmes are consistently among the country’s Top 10 programmes. This has resulted in this segment generating the highest revenue per 1-hour broadcast. Another lucrative segment is MNCN’s talent search shows ie Indonesian Idol, MasterChef Indonesia, and Kontes Dangdut Indonesia (KDI), which are among its popular offerings. The company has several new programmes in the pipeline including an e-sports talent search programme. Figure 5: RCTI’s popular sinetron – Putri Untuk Pangeran Figure 6: RCTI’s popular talent search programme – MasterChef Indonesia
Source: Company, RHB Source: Company, RHB
However, sinetron and talent search programmes are dependent on ratings. This is why MNCN has also diversified to special events, which are not reliant on ratings. These events broadcast live via its FTA TV channels and possibly its OTT platform (RCTI+), as well as generate ticket sales for audiences. Every year, the company holds birthday events for all its FTA TV channels: i. Malam Puncak RCTI 30; ii. Kilau Raya MNCTV 28; iii. GTV Amazing 17. These events feature various artistes and entertainers, including international artists. In addition to sponsorship, the event generates ticket revenue for its 2,500-seat capacity studio, including c.300 meet-and-greet tickets. Our discussions with management revealed that special events like these generate IDR6-7bn in revenue for a 5-6-hour event, or around IDR1.2bn per hour with direct costs of IDR3bn. The company plans to do more of these special events to pull in bigger absolute ad revenue and charge entrance fee as additional revenue. Other special events include its collaboration with technology companies such as Tokopedia and popular UGC platform TikTok, resulting in booked spots for 2020, as well as a new e-sports talent search programme. This is possible because MNCN has its own studio, thereby cutting cost for venue bookings. Figure 7: Malam Puncak RCTI 30 anniversary celebration Figure 8: GTV Amazing 17
Source: Company, RHB Source: Company, RHB
See important disclosures at the end of this report 5
Media Nusantara Citra Indonesia Initiating Coverage
8 September 2020 Communications | Media
Adding capacity with NTC ads with double the rates NTC ads are one of the company’s most lucrative FTA TV ad revenue. These include product/brand placements inside programmes or built-in, virtual ads projected onto banners/billboards, and squeeze frames. NTC ads add to the 576 (30-second) spots allowed per day in between programmes. Additionally, as the ads are customised by virtually adding the programme or physically adding the actual product or brand inside the studio when shooting the programme, MNCN can charge as much as double the rate of regular ad spots. The advantage of virtual ads is that the spot can be sold to another advertiser if the programme is re-aired or uploaded onto the company’s digital platforms. As at 2019, NTC ads contributed c.4-5% to ad revenue – and this is expected to grow to double digits in the coming years. Figure 9: Grab brand placement on Indonesian Idol, via RCTI Figure 10: Virtual billboard in a drama series
Source: RCTI YouTube page (MNCN’s channel) Source: Company
E-wallet play through QRIS-based ads A first in Indonesia, MNCN launched a shoppable QR-code ad in partnership with Bank Indonesia’s Quick Response Code Indonesian Standard (QRIS), which is standardised through various e-wallet operators including Go-pay, OVO, Dana, Link-Aja, Shopee Pay etc. These ads will enable audiences to directly purchase the product, or vouchers from advertisers with smaller ticket-sized products like FMCGs (ie Indomie by Indofood). We believe shoppable ads have a huge potential in Indonesia, especially with the increasing penetration rate of e-wallet. MNCN stands to receive ad revenue as well as merchant discount rates for every transaction. Figure 11: QRIS-based shoppable ads
Source: RCTI YouTube page (MNCN’s channel)
See important disclosures at the end of this report 6
Media Nusantara Citra Indonesia Initiating Coverage
8 September 2020 Communications | Media
Strong digital revenue growth despite the pandemic Digital ad revenue has seen rapid growth since the addition of digital revenue to MNCN’s business. 1H20 digital ad revenue was IDR409bn (26% YoY), or 10% of total revenue despite the pandemic. This segment includes revenue from its YouTube channels (24bn views and 97m subs, both ahead of peers), advertising from its news portals – Okezone and SINDOnews – as well as its RCTI+ OTT platform. From our discussions with management, MNCN is fully aware that digital ads are the future for media companies. This would come at the expense of FTA TV, its current top revenue- generating segment. However, management is optimistic that digital ad revenue will account for 40% and 50% of revenue by 2022 and 2024. The latest addition is the advertising-based video on demand (AVOD) platform: RCTI+. This platform currently has c.11m MAUs (compared to just 5m beginning FY20) and MNCN is targeting 30-40m MAUs by end-2020 (in comparison, SCMA’s subscription-based video on demand OTT is Vidio.com, which has 30m MAUs). MNCN’s management is confident that the AVOD business model is more suitable for Indonesia’s demographic. This is because the country’s disposable income level remains low at c.USD4,000 per capita, much lower than the Organisation for Economic Co-operation & Development’s (OECD) average of c.USD35,000. This is supported by the success of China’s iQiyi (556m MAU) and India’s Hotstar (300m MAU) – both began with the AVOD business model. On its RCTI+ anniversary, MNCN plans to add more features into the platform, including: i. News aggregator; ii. Audio streaming aggregator; iii. User generated content (UGC) platform, which will be integrated with its talent search programmes; iv. Games aggregator, in partnership with US-based Sea’s (SE US, NR) Garena. The added features are targeted towards bringing in more MAUs, which should ultimately translate into higher advertising. M&A or JV of MNCN’s OTT platform may also be a possibility, given increasing investments in this platform globally. Last year, the company agreed to a partnership with IQIYI (which was subsequently cancelled) to create the largest OTT platform in Asia. As an example, last year Disney+’s acquisition of Star India, which owns the OTT platform Hotstar, has allowed Hotstar to launch Disney+Hotstar, bringing an array of content in the likes of Disney, Pixar, Marvel, Star Wars, and National Geographic to the Indian subcontinent’s 1.2bn people. Therefore, a similar partnership is possible with RCTI+.
Figure 12: RCTI+’s web interface
Source: Company, RHB
See important disclosures at the end of this report 7
Media Nusantara Citra Indonesia Initiating Coverage
8 September 2020 Communications | Media
Proxy for YouTube, Facebook, and TikTok In addition to its existing digital segments, MNCN is already in partnership with Facebook (since May 2020) – it also has a collaboration with YouTube. MNCN uploads short clips of its FTA content and generates revenue from ads that are added to the videos. Its YouTube page is expected to generate IDR200bn worth of revenue in FY20F or c.30% of its digital revenue. This is due to the high number of views of its videos (24.1bn), combined with its pages and 97m subscribers. The company will also increase the length of its short clips to 10 minutes (from 3-5 minutes) to generate multiple ads. On Facebook, followers of its FTA TV pages are still small compared to those on YouTube (c.9m combined from RCTI, MNC TV, and GTV’s pages).
However, we believe there is strong potential given Indonesia’s large Facebook user base of 140m – the third largest in the world after the US and India. Its partnership with Facebook also comes with a minimum guarantee of ads. Additionally, MNCN has signed a deal with TikTok to hold three special events, including the TikTok awards in October, which will add to its special event revenue. Compared to its peers, MNCN is more active in seeking partnerships within the digital media universe to widen its scope of business.
Content business ramp up driven by Disney+ and Netflix At first glance, incoming OTT platforms like Disney+ and Netflix may seem like competition to MNCN’s OTT platform, but we believe this is where the company’s integrated business model comes in handy. The two OTT platform giants have driven MNCN’s content business growth. Taking into account the new accounts from Disney, MNCN’s content revenue surged 54% YoY during 2Q20 (+77% in 1H20). It is also not likely to be a one-off transaction. Its vast content library, especially animation (largest in the country) is perfect for Disney+.
Margins kept with managed costs despite volume drop Despite the lower topline from a drop in volume in 2Q20, the company was able to keep its GPM flat at 63% (1Q20: 63%) and 62% for 1H20 (1H19: 63%). EBITDA margin was also held at 46% for 2Q20 (1Q20: 46%) and 45% for 1H20 (1H19: 45%). This was attributed to the savings in direct costs as a majority of its production was shifted to its own studios, aside from reduced production costs. MNCN started investing to build its own studios in 2011. By 2H16, it opened three buildings each for its FTA channels with two studios for RCTI, four studios for GTV, and four studios for MNCTV. Utilisation of the studios is reflected in FY17 numbers whereby programming cost decreased by 9%, which widened GPM to 62% (vs 57% in 2016) and EBITDA margin to 44% (vs 39% in 2016). Meanwhile programmes remained relatively the same, with a focus on sinetron and talent search programmes. In 2019, the company finished building the RCTI+ studio – the largest in Asia – with a 2,500- person capacity. This will further pare down programming cost as well as increase revenue from special events held in the studios. Note that special events generated more absolute revenue with shorter programming times ie GTV’s Amazing 17, which generated IDR6bn in revenue. Moving forward, cost efficiency from studio utilisation combined with the potential increase in ad rates and additional revenue from NTC ads may lead to EBITDA margin expanding further. We forecast 2020-2021 EBITDA at IDR3.4trn and IDR4.2trn, with 44% and 46% margins. Figure 13: MNCN’s EBITDA margin (IDRbn) MNCN’s EBITDA margin expanded in 5,500 50% 46% FY17 to 44%, compared to FY16’s 44% 44% 44% 5,000 43% 45% 39%. This occurred after MNCN 42% 4,500 39% finished construction of its studio 37% 4,195 40% buildings, which cut down on 4,000 3,713 programming cost 35% 3,414 3,500 3,097 3,177 In our view, MNCN may continue to 30% 3,000 2,779 2,631 expand its margins through lower 2,407 2,500 25% budget in programming cost due to in- house production as well as grow 2,000 20% 2014 2015 2016 2017 2018 2019 2020F 2021F topline through potentially higher ad rates and additional revenue through EBITDA (LHS) EBITDA Margin (RHS) NTC ads
Source: Company data, RHB
See important disclosures at the end of this report 8
Media Nusantara Citra Indonesia Initiating Coverage
8 September 2020 Communications | Media
Figure 14: RCTI, MNCTV, and GTV studios in Kebon Jeruk Figure 15: GTV Amazing 17 event at the RCTI+ studio
Source: Company, RHB Source: Company, RHB
Lower tax and interest expenses in FY21F Additional margin upside also lies in potentially lower interest expenses and lower tax rates. MNCN’s parent Global Mediacom (BMTR IJ, NR) has received the approval for a private placement of up to 1.1bn shares since Jun 2019 (7% of outstanding shares). The company plans to lower its debt (maturing in 2022) by IDR1trn, through funds received from the private placement of new shares. The company issued 600m new shares at IDR855 per share, with total proceeds of IDR513bn. It still has the approval for another issuance of 500m new shares to gather funds to repay its debts. After the debt repayment, the company may lower its interest expenses by c.20-25%. Even before the debt repayment, its debt was still manageable in our view. As at Jun 2020, MNCN’s long-term debt was IDR3.2trn, with 71% of it maturing in Jun 2022 (IDR2.3trn), and only 17% maturing in FY21 (IDR556bn). Up to 1H20, net debt to equity ratio was 19%, which is lower than its 5-year average of 30%. 85% of its total long term debt is denominated in the USD. However, as at 1H20, interest coverage ratio was still at 6.3x. In addition to the lower interest, MNCN should receive a 6% tax cut in FY21F via the new tax incentive from the Government. This is in addition to the 3% cut in corporate income taxes from 25% to 22% (listed companies with a free float of more than 40% may receive an additional 3% cut bringing it down to 19%). This should be a direct upside for FY21F earnings. Global Mediacom sold a total 1.06bn of MNCN shares to the market, which increased its free float to 53% (from just below 40%). Hence, MNCN is eligible for the total 6% tax cut for FY21F.
Figure 16: MNCN’s net debt to equity Figure 17: MNCN’s long-term debt maturity profile
40% IDRbn 34% 35% 33% 2,500 80% 31% 2,303 30% 27% 70% 2,000 71% 60% 25% 23% 1,500 50% 20% 17% 40% 15% 12% 1,000 30% 556 10% 20% 500 385 5% 17% 10% 12% 0% 0 0% 2015 2016 2017 2018 2019 2020E 2021E 2021 2022 2023
2015 2016 2017 2018 2019 2020E 2021E LT Debt Mature % of LT Debt (RHS)
Source: Company data, RHB Source: Company data, RHB
See important disclosures at the end of this report 9
Media Nusantara Citra Indonesia Initiating Coverage
8 September 2020 Communications | Media Operating Matrices The table below displays the basic company and operating matrices of MNCN, SCMA, Visi Media Asia (VIVA IJ, NR), and unlisted Trans Media. MNCN was founded in 1997 by Chairman Bambang Hary Iswanto Tanoesoedibjo. It has investments in three key segments: media, financial services, and property. Through MNCN, the company owns and operates four national FTA TV stations: i. RCTI; ii. MNCTV; iii. GTV; iv. iNews. It also recently launched an OTT streaming service – RCTI+. SCMA was founded in 1990 as a media company specialising in TV broadcasting. It was acquired by Elang Mahkota Teknologi (EMTK IJ, NR) in 2001, with Eddy Kusnadi Sariaatmadja as its founder. SCMA runs its TV business through subsidiaries, SCTV and Indosiar Visual Mandiri or Indosiar. Both units run their own FTA channels. While MNCN and SCMA have marked their leading places in the domestic TV industry market, VIVA and Trans Corp are currently ranked third and fourth. VIVA was founded by the Bakrie Group in 1951 and started out as an agribusiness corporation. Since 2004, it has expanded into the telecommunications, media, metal, and coal mining industries. VIVA has become of one of Indonesia’s major media companies since 2004 via its FTA TV channels ANTV and tvOne. Up to Jan 2020, ANTV posted a 9.7% prime-time audience share, which places it in the fifth spot amongst FTA TV peers. Trans Media is in last place in terms of prime-time audience market share of 8.1% via its Trans7 FTA TV channel.
Figure 18: Media companies’ operating metrics MNCN SCMA VIVA TRANS Company Media Citra Nusantara Surya Citra Media Visi Media Asia Trans Media Major Global Mediacom Elang Mahkota Teknologi Bakrie Global Ventura CT Corp ownership Ownership (%) 47.9 61.9 53.7 - Years of 1989 1999 2004 1996 establishment CEO David Fernando Audy Sutanto Hartono Anindya Novyan Bakrie Atiek Nur Wahyuni Major Hary Tanoesoedibjo Eddy Sariaatmadja Bakrie Group CT Corp sponsors Market cap 18,487/1,294 16,473/1,155 823/57 Not listed (IDRbn/USDm) FTA Channels RCTI MNCTV GTV iNews SCTV IVM ANTV tvOne Trans Trans7 CNN Audience
share (%) Prime time 17.9 10.4 5.3 N/A 18.2 15.0 13.6 1.3 6.0 7.9 N/A All time 16.1 10.4 7.1 N/A 16.4 16.7 10.8 1.4 7.6 8.9 N/A Group prime 33.6 33.2 16.4 13.9 time Group all time 33.6 33.1 13.8 16.5 Reality Serial Family FTV, Animation, News, Drama, News, Infotainment, shows, drama, serial Drama, Dangdut, Channel focus variety talk reality talk lifestyle, talk News talent drama, infotainment talent shows shows shows shows variety show shows, search sports search comedy
Source: Company data, RHB
See important disclosures at the end of this report 10
Media Nusantara Citra Indonesia Initiating Coverage
8 September 2020 Communications | Media Financial Forecasts And Key Earnings Drivers Figure 19: MNCN’s revenue Figure 20: MNCN’s digital revenue (IDRbn) (IDRbn) 12,000 2,500 13.7% 15%
2,000 11.2% 10,000 9,252 10% 8,353 1,500 8.4% 8,064 1,269 8,000 7,444 7,053 1,000 907 6,666 6,730 697 6,445 3.5% 5% 6,000 500 1.3% 261
89 0 0% 4,000 2017 2018 2019 2020F 2021F 2014 2015 2016 2017 2018 2019 2020F 2021F Digital Revenue (LHS) Digital Revenue Contribution (RHS)
Source: Company data, RHB Source: Company data, RHB
Figure 21: COGS and programming cost Figure 22: GP and GPM (IDRbn) (IDRbn) 4,000 12,000 70%
3,500 3,327 64% 64% 10,000 64% 65% 62% 62% 3,030 3,097 2,902 3,000 2,813 2,861 2,875 2,825 2,730 2,719 2,670 2,835 2,594 2,693 8,000 58% 60% 2,487 2,643 57% 2,500 56% 5,924 6,000 5,323 5,162 55% 2,000 4,382 4,619 3,853 3,856 4,000 3,584 50% 1,500
1,000 2,000 45% 2014 2015 2016 2017 2018 2019 2020F 2021F 2014 2015 2016 2017 2018 2019 2020F 2021F Programming costs COGS GP (LHS) GP Margin (RHS)
Source: Company data, RHB Source: Company data, RHB
Figure 23: Operating income and margins Figure 24: EBITDA and EBITDA margins (IDRbn) (IDRbn) 6,000 45% 8,000 55%
7,000 50% 5,000 44% 44% 44% 45% 39% 42% 43% 45% 39% 40% 6,000 38% 38% 39% 37% 37% 40% 4,000 5,000 3,580 34% 35% 4,140 35% 35% 3,034 4,000 3,713 3,540 3,000 2,740 30% 2,604 2,666 3,097 3,177 2,332 3,000 2,779 2,631 2,194 2,407 25% 2,000 30% 2,000 20% 2014 2015 2016 2017 2018 2020F 2021F 2014 2015 2016 2017 2018 2019 2020F 2021F Operating Income (LHS) Operating Margin (RHS) EBITDA (LHS) EBITDA Margin (RHS)
Source: Company data, RHB Source: Company data, RHB
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Media Nusantara Citra Indonesia Initiating Coverage
8 September 2020 Communications | Media
Figure 25: Net income and margin (IDRbn) 5,000 35%
28% 30% 4,000 26% 27% 24% 25% 3,000 20% 21% 21% 18% 2,578 2,233 20% 1,973 2,000 1,762 1,531 15% 1,369 1,453 1,186 1,000 10% 2014 2015 2016 2017 2018 2019 2020F 2021F
Net Income (LHS) Net Margin (RHS)
Source: Company data, RHB
Figure 26: Earnings forecasts – RHB vs Street RHB Consensus RHB as % of Cons 2020F 2021F 2020F 2021F 2020F 2021F Revenue 8,064 9,252 8,346 9,045 97% 102% Gross profit 5,162 5,924 5,310 5,788 97% 102% Operating profit 3,034 3,580 3,198 3,438 95% 104% EBITDA 3,540 4,140 3,582 3,941 99% 105% Net profit 1,973 2,578 1,988 2,338 99% 110%
Gross margin 64% 64% 64% 64% Operating margin 38% 39% 38% 38% EBITDA margin 44% 45% 43% 44% Net margin 24% 28% 24% 26%
Source: Company data, RHB, Bloomberg
Our FY21 numbers are 2% higher than consensus at topline level (+14% YoY), due to an assumption of 15% volume recovery from FY20F numbers and additional 5% potential ad rate increase (same growth rate as FY19). However, our earnings are 10% above consensus as we take into account the lower interest expense (deleveraging of the IDR1trn plan this year from the proceeds of the private placement) and a lower tax rate (19% compared to 25% in FY20) due to the tax incentive from the Government (3% cut and additional 3% reduction for listed companies with below 40% free float). Looking at consensus numbers, the tax rate is still set at 25%, hence, the higher earnings on our side.
Valuation BUY with IDR1,640 TP We derive a 12-month TP of IDR1,640, which implies 10x 2020F P/E – set at -0.5SD from its 5-year mean – from a 2021F EPS of IDR164 per share. For comparison, our 10-year DCF valuation – assuming 13.1% WACC and 5% terminal growth – also shows 9.8x P/E for its IDR1,621 NPV per share. Our multiple target is justifiable given it is at a 30% discount to regional peers and SCMA. Given MNCN’s lower ROE and higher leverage, it usually trades to a discount to SCMA.
See important disclosures at the end of this report 12
Media Nusantara Citra Indonesia Initiating Coverage
8 September 2020 Communications | Media
Figure 27: MNCN’s P/E valuation P/E 2020F
Regional peers P/E (x) 13.0 Applied discount for MNCN (%) 30% Our TP of IDR1,640 implies 10x 2020F P/E, an undemanding multiple Implied MNCN P/E (x) 10.0 MNCN EPS 2020F (IDR) 164 MNCN equity value/ share (IDR) 1,640
Source: Company data, RHB
Figure 28: MNCN’s 3-year P/E band
+2 SD = 25.6x 25.0
+1 SD = 19.3x 20.0 MNCN is currently trading at an undemanding 5.3x P/E, below -1SD to its 5-year mean 15.0 Mean = 13x Our 12-month TP of IDR1,640 implies 10.0 10x P/E (set at +0.5SD from its 5-year -1 SD = 6.7x mean) 5.0 P/E = 5.3px
-2 SD = 0.4x 0.0
Source: Company data, RHB
Figure 29: MNCN’s 10-year DCF valuation IDRbn 2020F 2021F 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F EBIT 3,034 3,580 3,758 4,320 5,233 5,952 7,001 8,490 10,566 13,418 EBIT (1-t) 2,275 2,685 2,818 3,240 3,925 4,464 5,251 6,368 7,925 10,064 Depreciation & amortisation 507 561 610 663 722 786 855 931 1,014 1,104 Capex (600) (600) (600) (600) (600) (600) (600) (600) (600) (600) Change in working capital 239 (608) (496) (669) (841) (807) (978) (1,195) (1,471) (1,825) Net free cash flow to firm 2,421 2,038 2,332 2,634 3,206 3,842 4,528 5,504 6,867 8,743 33,148 Terminal Value
Terminal growth 5% WACC 13.1% 28,336 Total discounted firm value
Less: net debt 2,892 Equity value 25,444 15.70 Number of shares (bn)
1,621 Equity value per share (IDR)
Source: RHB
See important disclosures at the end of this report 13
Media Nusantara Citra Indonesia Initiating Coverage
8 September 2020 Communications | Media
Figure 30: Regional media valuation table BBG Market Name Rating Price TP Upside/ 2021F Ticker Cap downside P/E Yield ROE (IDR) (IDR) (%) (%) (USDm) (x) (%) (%) Indonesia Media Surya Citra Media PT TBK SCMA IJ BUY 1,200 1,550 29% 1,199 12.5 2.5 21.0 Media Nusantara Citra TBK PT MNCN IJ BUY 860 1,640 91% 865 4.8 8.0 17.7 Sector Weighted Average 9.3 4.8 19.6 Regional Media Sky Perfect Jsat HOLDINGS 9412 JP NR 461.0 1,289 15.4 3.9 6.0 Innocean Worldwide INC TL5 SM NR 3.3 1,268 7.2 - 17.0 TV Today Network TVTN IN NR 244.2 198 11.4 9.1 15.8 Astro Malaysia ASTRO MK NR 0.8 966 7.9 8.4 70.3 Singapore Press Holdings SPH SP NR 1.1 1,233 12.6 7.5 5.9 Plan B Media PLANB TB NR 5.8 711 28.5 2.1 6.9 Sector Weighted Average 13.2 4.6 19.9
Source: Bloomberg, RHB
Figure 31: MNCN’s P/E discount to SCMA’s
0.3
0.1
+2 SD = -12% -0.1 MNCN is currently trading at more than +1 SD = -31% -0.3 62.9% discount to SCMA’s P/E Mean = -50% We believe MNCN deserves to trade at -0.5 a smaller discount to its peers, considering its cheap P/E -0.7 -1 SD = -69.6% -2 SD = -88% -0.9
-1.1 2015 2016 2017 2018 2019 2020
Source: Company data, RHB
Valuation gap with SCMA MNCN is currently trading at 5x P/E compared to SCMA’s 13x FY21F P/E (c.61% discount) which in our view, is too great of a disparity. MNCN does tend to trade at a discount to SCMA due to its lower ROE and higher debt profile. However, at current estimates, MNCN’s ROE is only 15% lower than SCMA’s, which in our view, should translate to a smaller discount to its peer. We set our TP for MNCN at 10x, or c 30% discount from SCMA, (+1SD to its mean discount to SCMA).
Risks Downside risks to our call include: i. Economic downturn. Given the recent COVID-19 pandemic that has dampen economic growth in the country, an economic downturn may lead to lower purchasing power by customers and delayed product launches by consumer companies. This may translate into lower ad spend; ii. Risks on foreign currency, which should translate to higher interest expense from its USD-denominated debt; iii. Execution risk on partnerships; iv. Corporate governance is also a risk when it comes to being a subsidiary of a large holding company due to the complex company structure within the group; v. Risks of migration from analogue to digital TV, which has been mentioned several times by the Government and is included in the revision of UU No.32/2002 in Article 83-87, and other regulatory risks regarding new licensing fees – these were also mentioned in the revision of the said UU No 32/2002.
See important disclosures at the end of this report 14
Media Nusantara Citra Indonesia Initiating Coverage
8 September 2020 Communications | Media Company Profile MNCN is one of the largest fully integrated media companies in South-East Asia. In Indonesia, it operates four out of the country’s 11 FTA TV stations. Its revenue mostly comes from ads, which account for more than 90% of topline. MNCN also has additional core businesses in TV content production and delivery. Its four FTA stations are RCTI, MNCTV, GTV, and iNews. It also has 20 pay-TV channels. As at 2019, RCTI owned the largest prime-time audience share at 21.3%. In total, MNCN has the largest nationwide audience share of more than 40%, as well as ad spend share of 45%. It also owns radio, print media, talent management, and TV production companies that operate to support its core business focus. MNCN was listed on the IDX in 2007 with a free float of 41.82%. It has a market cap of USD1.1bn and a 3-month average daily trading volume of IDR32.5m. The company is part of the MNC Group, an investment entity that also has two other strategic investments other than media: financial services and lifestyle property.
Figure 32: MNCN’s segment information
Source: Company, RHB
See important disclosures at the end of this report 15
Media Nusantara Citra Indonesia Initiating Coverage
8 September 2020 Communications | Media Management Team Figure 33: Board of directors
Name Position Description
David Fernando Audy President director David Fernando Audy obtained his Bachelor of Commerce in Finance and Information System and Master of Commerce degree in Accounting from the University of New South Wales. He has worked in MNC Group since 2003 and was appointed as CEO of MNCN in 2016. He simultaneously holds various important roles in the company –: director of Global Mediacom, president director of GTV, vice president commissioner of MNC Pictures, and commissioner of Linktone Indonesia.
Director Kanti Mirdiati Imansyah earned her Associate Degree in Fashion Merchandising Kanti Mirdiati Imansyah from IFS San Diego. She also completed her Bachelor of Science Degree at La Jolla Academy of Advertising Arts in San Diego, US. Since 2012, Kanti has been serving as vice president director of RCTI and was appointed as a director of MNC in 2013. Her main responsibility is to ensure that the company’s business operations run smoothly.
Director Ella Kartika received her Master of Management degree in Banking & Finance Ella Kartika from the University of Indonesia. She joined the company in 2008 and was appointed as a director of MNC in 2014. Ella is responsible in overseeing the operational aspects of the company. She also serves as a commissioner with RCTI, GTV, and iNews. Ella is also managing director of MNC Pictures, president director of MNC Lisensi Internasional, and MNC Studios International.
Director Ruby Panjaitan obtained his Masters in Management (MM)/MBA from the Institute Ruby Panjaitan of Management Development of Indonesia (IPMI) Business School. He joined the company in 2007 and was appointed as a director of MNC in 2018. Previously, he held the position of director of iNews and TV Bursa in 2017-2018.
Director Gwenarty Setiadi graduated from the University of Satya Wacana with a Gwenarty Setiadi Bachelor’s Degree in Agriculture. She joined the company in 2008 and was appointed as a director of MNC in 2016. Gwenarty is responsible for human resources-related matters – including hiring professional talent – and establishing as well as reviewing business processes across the company’s subsidiaries.
Source: Company
See important disclosures at the end of this report 16
Media Nusantara Citra Indonesia Initiating Coverage
8 September 2020 Communications | Media
Figure 34: Board of commissioners Name Position Description
Hary Tanoesoedibjo President commissioner Hary Tanoesoedibjo obtained his Bachelor of Commerce from Carleton University, Ottawa, Canada, and a MBA from Ottawa University. He is the founder, controlling shareholder, and executive chairman of MNC Group, which focuses on three business activities: media, financial services, and lifestyle property – this is under the main holding company MNC Investama.
Syafril Nasution Commissioner Syafril Nasution graduated with a degree in Corporate Economics from Sekolah Tinggi Ilmu Ekonomi Perbanas. He was appointed as a commissioner of MNC in 2018. He has been serving as director of Corporate Affairs of Rajawali Citra Televisi Indonesia since 2009, as well as director of Corporate Secretary of MNC Group since 2016. Syafril has also been a commissioner of Cipta Televisi Pendidikan Indonesia (MNCTV) since 2014.
M Alfan Baharudin Independent commissioner M Alfan Baharudin completed his education at the Naval Academy majoring in Marine Corps in 1981, then with Indonesian National Army (TNI) for the Combat Staff Course in Bandung in 1987, Army Staff and Command School (SESKO AD) in 1996, TNI Staff and Command School (SESKOT NI) in 2002, and then completing LEMHANAS in 2005. M Alfan was appointed as an independent commissioner of MNC in 2018.
Source: Company
Figure 35: Company milestones Year Description 1987 Rajawali Citra Televisi Indonesia (RCTI) was established as the first private national TV station in Indonesia. 1990 Cipta Televisi Pendidikan Indonesia (MNCTV, formerly known as TPI) was established as the third private national TV station in Indonesia. 1997 MNCN was established as a holding company in content- and advertising-based media. 2001 Acquired 70% of GlobalTV’s shares. 2002 Consolidated with Global Informasi Bermutu (GlobalTV) and commenced the exclusive broadcasting of MTV Asia’s programmes in Indonesia on a 24-hour basis. 2004 Acquired RCTI and began developing its content library through in-house production and acquisition of programmes from third parties. 2005 Began distributing content to third parties 2006 Launched MNC News and MNC Entertainment through Indovision 2007 Launched Okezone.com and completed an IPO on the IDX. 2012 Launched MNC Comedy, MNC Drama, MNC Infotainment, MNC Fashion, and Golf Channel on Indovision. 2014 Launched its fourth national TV station, SindoTV. 2015 SindoTV changed its name to iNews. 2016 MNC Media signed MoUs between MNCN and Korea Creative Content Agency. 2017 GlobalTV rebranded and launched new logo as GTV and iNews as the FTA broadcaster for the Indonesia Basketball League (IBL) 2017. 2018 iNews launched iNews.id and MNC Studios International issues an IPO.
Source: Company
See important disclosures at the end of this report 17
Media Nusantara Citra Indonesia Initiating Coverage
8 September 2020 Communications | Media Recommendation Chart
Date Recommendation Target Price Price Price Close 2020-09-07 2,520 Source: RHB, Bloomberg 2,320
2,120 1,920 1,720 1,520 1,320 1,120 920 720 520 Sep-15 Dec-16 Mar-18 Jun-19
Source: RHB, Bloomberg
See important disclosures at the end of this report 18
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RHB Securities (Thailand) PCL did not receive compensation or benefit (including United States gift and special cost arrangement e.g. company/issuer-sponsored and paid trip) in This report was prepared by RHB is meant for distribution solely and directly to “major” relation to the production of this report. U.S. institutional investors as defined under, and pursuant to, the requirements of Rule 15a-6 under the U.S. Securities and Exchange Act of 1934, as amended (the Indonesia “Exchange Act”) via a registered U.S. broker-dealer as appointed by RHB from time to Save as disclosed in the following link RHB Research conflict disclosures – September time. Accordingly, any access to this report via Bursa Marketplace or any other 2020 and to the best of our knowledge, PT RHB Sekuritas Indonesia hereby declares Electronic Services Provider is not intended for any party other than “major” US that: institutional investors (via a registered U.S broker-dealer), nor shall be deemed as 1. PT RHB Sekuritas Indonesia and its investment analysts, does not have any solicitation by RHB in any manner. RHB is not registered as a broker-dealer in the interest in the securities of the subject company(ies) covered in this report. United States and currently has not appointed a U.S. broker-dealer. Additionally, RHB For the avoidance of doubt, interest in securities include the following: does not offer brokerage services to U.S. persons. Any order for the purchase or sale a) Holding directly or indirectly, individually or jointly own/hold securities or of all securities discussed herein must be placed with and through a registered U.S. entitled for dividends, interest or proceeds from the sale or exercise of the broker-dealer as appointed by RHB from time to time as required by the Exchange Act subject company’s securities covered in this report*; Rule 15a-6. For avoidance of doubt, RHB reiterates that it has not appointed any U.S. b) Being bound by an agreement to purchase securities or has the right to broker-dealer during the issuance of this report. This report is confidential and not transfer the securities or has the right to pre subscribe the securities*. intended for distribution to, or use by, persons other than the recipient and its c) Being bound or required to buy the remaining securities that are not employees, agents and advisors, as applicable. Additionally, where research is subscribed/placed out pursuant to an Initial Public Offering*. distributed via Electronic Service Provider, the analysts whose names appear in this d) Managing or jointly with other parties managing such parties as referred to in report are not registered or qualified as research analysts in the United States and are (a), (b) or (c) above. not associated persons of any registered U.S. broker-dealer as appointed by RHB 2. PT RHB Sekuritas Indonesia is not a market maker in the securities or capital from time to time and therefore may not be subject to any applicable restrictions under market products of the subject company(ies) covered in this report. Financial Industry Regulatory Authority (“FINRA”) rules on communications with a 3. None of PT RHB Sekuritas Indonesia’s staff** or associated person serve as a subject company, public appearances and personal trading. Investing in any non-U.S. director or board member* of the subject company(ies) covered in this report. securities or related financial instruments discussed in this research report may 4. PT RHB Sekuritas Indonesia did not receive compensation for investment banking present certain risks. The securities of non-U.S. issuers may not be registered with, or or corporate finance services from the subject company in the past 12 months. be subject to the regulations of, the U.S. Securities and Exchange Commission. 5. PT RHB Sekuritas Indonesia** did not receive compensation or benefit (including Information on non-U.S. securities or related financial instruments may be limited. gift and special cost arrangement e.g. company/issuer-sponsored and paid trip) in Foreign companies may not be subject to audit and reporting standards and regulatory relation to the production of this report: requirements comparable to those in the United States. The financial instruments Notes: discussed in this report may not be suitable for all investors. Transactions in foreign *The overall disclosure is limited to information pertaining to PT RHB Sekuritas markets may be subject to regulations that differ from or offer less protection than Indonesia only. those in the United States. **The disclosure is limited to Research staff of PT RHB Sekuritas Indonesia only.
DISCLOSURE OF CONFLICTS OF INTEREST Singapore Save as disclosed in the following link RHB Research conflict disclosures – September RHB Investment Bank Berhad, its subsidiaries (including its regional offices) and 2020 and to the best of our knowledge, the Singapore Research department of RHB associated companies, (“RHBIB Group”) form a diversified financial group, Bank Berhad (Singapore branch) hereby declares that: undertaking various investment banking activities which include, amongst others, 1. RHB Bank Berhad, its subsidiaries and/or associated companies do not make a underwriting, securities trading, market making and corporate finance advisory. market in any issuer covered by the Singapore research analysts in this report. 2. RHB Bank Berhad, its subsidiaries and/or its associated companies and its As a result of the same, in the ordinary course of its business, any member of the analysts do not have a financial interest (including a shareholding of 1% or more) RHBIB Group, may, from time to time, have business relationships with or hold in the issuer covered by the Singapore research analysts in this report. positions in the securities (including capital market products) or perform and/or solicit 3. RHB Bank Berhad’s Singapore research staff or connected persons do not serve investment, advisory or other services from any of the subject company(ies) covered on the board or trustee positions of the issuer covered by the Singapore research in this research report. analysts in this report. 4. RHB Bank Berhad, its subsidiaries and/or its associated companies do not have While the RHBIB Group will ensure that there are sufficient information barriers and and have not within the last 12 months had any corporate finance advisory internal controls in place where necessary, to prevent/manage any conflicts of interest relationship with the issuer covered by the Singapore research analysts in this to ensure the independence of this report, investors should also be aware that such report or any other relationship that may create a potential conflict of interest. conflict of interest may exist in view of the investment banking activities undertaken by 5. RHB Bank Berhad’s Singapore research analysts, or person associated or the RHBIB Group as mentioned above and should exercise their own judgement connected to it do not have any interest in the acquisition or disposal of, the before making any investment decisions. securities, specified securities based derivatives contracts or units in a collective investment scheme covered by the Singapore research analysts in this report. In Singapore, investment research activities are conducted under RHB Bank Berhad 6. RHB Bank Berhad’s Singapore research analysts do not receive any (Singapore branch), and the disclaimers above similarly apply. compensation or benefit in connection with the production of this research report or recommendation on the issuer covered by the Singapore research analysts. Malaysia Save as disclosed in the following link RHB Research conflict disclosures – September Analyst Certification 2020 and to the best of our knowledge, RHBIB hereby declares that: The analyst(s) who prepared this report, and their associates hereby, certify that: 1. RHBIB does not have a financial interest in the securities or other capital market (1) they do not have any financial interest in the securities or other capital market products of the subject company(ies) covered in this report. products of the subject companies mentioned in this report, except for: 2. RHBIB is not a market maker in the securities or capital market products of the subject company(ies) covered in this report. Analyst Company 3. None of RHBIB’s staff or associated person serve as a director or board member* - - of the subject company(ies) covered in this report *For the avoidance of doubt, the confirmation is only limited to the staff of research (2) no part of his or her compensation was, is or will be directly or indirectly related to department the specific recommendations or views expressed in this report. 4. RHBIB did not receive compensation for investment banking or corporate finance services from the subject company in the past 12 months.
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KUALA LUMPUR JAKARTA RHB Investment Bank Bhd PT RHB Sekuritas Indonesia Level 3A, Tower One, RHB Centre Revenue Tower, 11th Floor, District 8 - SCBD Jalan Tun Razak Jl. Jendral Sudirman Kav 52-53 Kuala Lumpur 50400 Jakarta 12190 Malaysia Indonesia Tel : +603 9280 8888 Tel : +6221 509 39 888 Fax : +603 9200 2216 Fax : +6221 509 39 777
BANGKOK SINGAPORE RHB Securities (Thailand) PCL RHB Bank Berhad (Singapore branch) 10th Floor, Sathorn Square Office Tower 90 Cecil Street 98, North Sathorn Road, Silom #04-00 RHB Bank Building Bangrak, Bangkok 10500 Singapore 069531 Thailand Tel: +66 2088 9999 Fax :+66 2088 9799
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