BUY | Virtue 14 September 2023 | Equity Research | Media Sector

Surya Citra Media

Target Price: IDR216 | BUY The Worst Might be Over: U/G to BUY
Audience Share continues to climb
Andre Benas
andre.benas@bcasekuritas.co.id Upgrade from Hold to BUY with TP of IDR216 as we think the worst is over for SCMA. Audience
+6221 23587222 ext 11101 shares has recovered from 34.8% to 36.6% in 2Q23. We believe that the better audience share
could translate to slight improvement in its advertising revenue. In terms of cyclicality, 2 nd half of
Ervina Salim the year tend to be a better timing for SCMA to book more revenue and profitability. Looking at the
ervina.salim@bcasekuritas.co.id top 10 program in latest month, 5 contents from SCMA ranked quite well in the top 10 programs.
2 of Sinetrons from SCMA placed as the number one and the runner up. We think that ahead of
election in 1Q24, there could be a potential slight increase in advertising revenue. Although, we do
C urrent Price: IDR162 not expect the increase in advertising revenue in TV will outperform the previous election as the
Upside potential: 33.3% competition from social media and OTT intensified.
Poised to better 2H23
When we look at the profitability and revenue cycle, 2H23 will likely be a better place for SCMA as
12M PRICE PERFORMANCE most of the revenue were built in 2H compare to 1H. In 1H23, we saw a lot of holidays which
(IDR) (%) contribute to lower spending as we saw in the retail data. In 2H23, we expect the volume of
500 50.0 consumption will be better compare to 1H23 especially with the election spending which likely to
400
happen in late 3Q23 to 4Q23. In 2Q23, the advertising revenue declined by -4% YoY compare to 3%
25.0
growth last year. Moreover, looking at the cycle we think that 1H23 advertising revenue was at
300
- lower base compare to last year, so we think that 2H23 should be a better quarter. In terms of QoQ,
200 we saw much improvement in the QoQ growth for the advertising revenue as it improved from -
100
(25.0) 24% YoY to -4% YoY.
- (50.0) GP Margin at the bottom
Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 When we look at the programming cost, the cost is still relatively at the highest despite the world
SCMA IJ (LHS) Rel. to JCI performance (RHS) cup programming was already done in 4Q22. So we suspect they still amortized some cost during
Source: Bloomberg 1H23. GP margin has improved from its bottom in 4Q22 to around 30% in 2Q23 which we think
that the lower GP margin mainly driven by weakness in advertising revenue. There is no significant
big programming ahead for SCMA as the competition in programming in FTA TV is also a stagnant
STOCK PERFORMANCE
market. Competition from OTT or social media probably is even worse compare to traditional TV.
YTD 1M 3M 12M
In our view, the cost could be normalized soon and GP margin could probably back to around 35%
Absolute -21.4% 3.8% 1.9% -27.0%
JC I Return 1.2% 0.8% 3.2% -5.2%
ahead.
Relative -22.6% 3.0% -1.3% -21.8%
Upgrade to BUY from Neutral with TP of IDR216/sh
Source: Bloomberg
We upgrade our NEUTRAL call to BUY with TP of IDR216 or 33% upside from current price. Two key
thesis that we should buy for SCMA are that the profitability might be at the bottom, and we expect
MARKET DATA the advertising revenue could improve. Government spending will most likely help the advertising
12M price range (IDR) : 137 - 268 trend in 2H23 although we realized that the shares of FTV are continuously going down as the rise
12M PE range (x) : 8.6 - 23.4 of Tiktok and other OTT in Indonesia media landscape. We do not think that the political spending
Outstanding shares (mn) : 73,971 will be a major contributor to this election but it will help to ease a little bit pressure from the
Market cap (IDRbn)/(USDmn) : 11,983 / 780 declining TV advertising shares.
Avg daily turn. (IDRbn/USDmn) : 24.3 / 1.6
Source: Bloomberg
Financial highlights 2020 2021 2022 2023F 2024F
Revenue (IDRbn) 5,101 5,930 7,132 6,820 7,220
Operating profit (IDRbn) 1,455 1,695 917 682 854
SHAREHOLDERS
EBITDA (IDRbn) 1,630 1,875 1,115 904 1,101
PT Elang Mahkota Teknologi : 61.0%
Public : 24.5%
Net profit (IDRbn) 1,148 1,347 846 610 663
Treasury shares : 14.6%
Net Margin (%) 22.5 22.7 11.9 8.9 9.2
Source: Bloomberg, BCA Sekuritas
EPS (IDR) 18 21 13 10 10
EPSG (%) 11.1 (73.7) (37.2) (27.9) 8.7
P/E (x) 2.0 7.5 11.9 16.6 15.2
BVPS 275 118 138 147 158
P/BV (x) 0.6 1.4 1.2 1.1 1.0

andre.benas@bcasekuritas.co.id
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The Worst Might be Over SCMA | BUY

Financial summary
Income Statement
2020 2021 2022 2023F 2024F
Year-end 31 Dec (IDRbn)
Revenue 5.101 5.930 7.132 6.820 7.220
Cost of revenue 2.492 2.887 4.430 4.440 4.640
Gross profit 2.609 3.044 2.702 2.380 2.580
EBIT 1.455 1.695 917 682 854
Net Interest income 22 (35) (3) (19) (11)
Other incomes/ (expenses) 11 65 179 122 10
Pre-tax profit 1.488 1.726 1.095 785 854
Tax Expenses (338) (388) (415) (173) (188)
Minority Interests 2 (9) (166) 2 3
Net Income 1.148 1.347 846 610 663
Earnings per share 18 21 13 10 10
Balance Sheets
2020 2021 2022 2023F 2024F
Year-end 31 Dec (IDRbn)
Cash and cash equivalents 678 3.232 2.331 2.902 3.203
Trade receivables 1.853 1.953 2.292 2.029 2.148
Inventories 671 784 1.097 942 985
L-T investment & receivables 45 104 115 115 115
Fixed assets 1.479 1.547 1.664 1.842 1.995
Other assets 2.040 2.295 3.461 3.634 3.816
Total assets 6.767 9.913 10.959 11.464 12.262
Short term liabilities 201 7 302 302 302
Other short term liabilities 1.341 1.691 1.781 1.800 1.887
Long term liabilities 1.123 606 3 3 3
Other long term liabilities 205 149 164 249 262
Total liabilities 2.870 2.452 2.250 2.354 2.453
Total equities 3.897 7.461 8.709 9.110 9.809
Total liabilities & Equities 6.767 9.913 10.959 11.464 12.262
Cash Flow Statement
2020 2021 2022 2023F 2024F
Year-end 31 Dec (IDRbn)
Net income 1.148 1.347 846 921 936
Depreciations and Amortization 175 180 198 223 246
Change in working capital 447 (148) (1.471) 211 (182)
Cash flows from operating activities 1.771 1.380 (426) 1.355 1.001
Capex (153) (247) (318) (400) (400)
Others (23) (28) (417) (78) (81)
Cash flows from investing activities (175) (275) (736) (478) (481)
Dividend Paid - - - - -
Net change in debt 1.312 (711) (308) - -
Others (2.818) 1.712 324 85 12
Cash flows from financing activities (1.506) 1.001 16 85 12
Net increase/(decrease) in cash and cash 89 2.106 (1.146) 962 532
equivalents
Cash and cash equi. at the begin. of the year 545 678 3.197 2.086 3.084
Cash and cash equi. at the end of the year 678 3.197 2.086 3.084 3.651
Key metrics 2020 2021 2022 2023F 2024F
Gross margin (%) 51,2 51,3 37,9 34,9 35,7
Operating margin (%) 28,5 28,6 12,9 10,0 11,8
Net margin (%) 22,5 22,7 11,9 8,9 9,2
ROE (%) 24,3 21,6 9,6 6,8 6,9
Current ratio (x) 2,3 3,9 3,7 3,7 3,9
Cash ratio (x) 1,6 3,1 2,2 2,3 2,4
Gearing (%) 34,0 8,2 3,5 3,3 3,1

andre.benas@bcasekuritas.co.id
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 The Worst Might be Over SCMA | BUY

Exhibit 1. GP margin at the lowest, improving advertising revenue might lead to better GP

Sources: Company, BCA Sekuritas

Exhibit 2. Improving advertising revenue growth, 2H always better compare to 1H

Sources: Company, BCA Sekuritas

Exhibit 3. 1H23 Financial Highlights

Sources: Company, BCA Sekuritas

andre.benas@bcasekuritas.co.id
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The Worst Might be Over SCMA | BUY

Exhibit 4. All time Audience Share Exhibit 5. Prime Time Audience Share

Sources: Company, BCA Sekuritas Sources: Company, BCA Sekuritas

Exhibit 6. Top 10 TV Programs as of 7 Sept-23 Exhibit 7. PE band

Sources: Instagram @indotvtrends, BCA Sekuritas Sources: Company, BCA Sekuritas

Exhibit 8. Forecast Revision

andre.benas@bcasekuritas.co.id
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The Worst Might be Over SCMA | BUY

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research@bcasekuritas.co.id ecm@bcasekuritas.co.id sales@bcasekuritas.co.id

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