A digital pure-play in MNC Group

We met with MNC Digital Entertainment to discuss the Co's updates. As the digital media arm of MNCN, we view MSIN as MNC Group's proxy to digital pure-play, unburdened by the sunsetting FTA segment. Indeed, MNCN's revenue from digital, content & IP, and subscription, which 69.3% (as of 1H24) was contributed from MSIN, booked consolidated 15.2% YoY growth in 1H24. In contrast, non-digital advertisement (FTA) continued its declining trend (-21.5% YoY in 1H24), despite support from Euro Cup in 2Q24. Amidst declining eyeballs trend in FTA and minimum signs of recovery post-ASO, FTA segment may prove to be an unsavory component weighing on valuation, in which case MSIN provides a more attractive proposition with its focus on key growth drivers, in our view

MSIN houses MNC Group's OTT platform, MNC Vision+ (Subscription-based VOD) and RCTI+ (Free service advertisement-based VOD), as well as news portals (iNews, IDX Channels, Sindo News, Okezone). The Co also reveals that all IPs, ranging from web series to soap opera titles (e.g. Ikatan Cinta), are also under MSIN's books, which contributes c.40% to total revenue via IP monetization (Licensing of IPs to in-house platforms and third-party). Of note, the bulk of value driver in production business typically comes from the ability to continuously monetize IP, especially to thirdparties which could yield a c.90% gross margin. Other revenue streams under MSIN includes talent management and social media (c.5% each to total revenue)

Upcoming stock split should bode well for share price

The Co will be conducting a 1:5 stock split in Oct-24 as the Co aims to boost liquidity by providing accessibility to its stock. The new post-split price will be effective on 7 Oct-24 and post-split the shares outstanding will stood at 60.6bn, implying annualized EPS of c.IDR10 (1H24). We think the stock split should be favorable for MSIN, as the action likely will increase appeal of the stock, particularly to retail investors. The stock now trades at 81.8x EV/EBITDA, 14.0x PBV.

MSIN - Back to The Future

MSIN - Back to The Future

PT XL Axiata Tbk

02 October 2024 - 07.00am

MSIN - Back to The Future

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