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MNCN
MNCN, a quadrupler
🎯 📺 📈 Rp3,600
Last 12 months cashflow +Rp1.508bn ⬆️⬆️
August 28th, 2020
⏰ 1 minute read
⏰ 1 minute read
Watch the 3 minute explainer using the data file & model ⬇️
Sales
We’ve tended to overestimate MNCN. Sales growth in 2Q was -18%, that’s 13% below our forecast & the 5th negative growth quarter in the last six years. Digital advertising grew +26%, but traditional advertising & content were down by -24% & -20%. We still expect a recovery, but with a lower +6.96% growth in the next 12 months to Rp8.63tn.
Cashflow
Despite the negative sales growth, free cashflow was above our forecast at Rp683bn, & the 4th quarter in a row of positive cashflow ex. working capital as investment spending slowed. The last 12 months average quarterly is now Rp377bn & with our sales growth & continued low investment spending, we see this rising to Rp515bn in the next 12 months.
We’ve tended to overestimate MNCN. Sales growth in 2Q was -18%, that’s 13% below our forecast & the 5th negative growth quarter in the last six years. Digital advertising grew +26%, but traditional advertising & content were down by -24% & -20%. We still expect a recovery, but with a lower +6.96% growth in the next 12 months to Rp8.63tn.
Cashflow
Despite the negative sales growth, free cashflow was above our forecast at Rp683bn, & the 4th quarter in a row of positive cashflow ex. working capital as investment spending slowed. The last 12 months average quarterly is now Rp377bn & with our sales growth & continued low investment spending, we see this rising to Rp515bn in the next 12 months.
7% sales growth, higher cashflow, lower debt, shares 4x...
Balance sheet
The balance sheet is in net debt because of previous negative cashflow. The debt has been around Rp4tn the last few years as positive cashflow has gone to equity rather than paying debt. But in 2Q net debt fell to Rp3.87tn. With our cashflow forecast & a Rp651bn dividend, net debt will fall to Rp2.46tn in the next 12 months.
Profit
Despite the drop in sales, net profit was higher than a year ago because of FX gains. Without that & because of the sales decline, the cash cost ratio, net profit add depreciation & FX minus sales as % of sales was higher at 69%. We use the 12 month average 68% to predict next 12 months profit Rp2.36tn, +10.2%.
Value
MNCN has become a payer of capital & we see the payments accelerating this next 12 months. At Rp15.2tn, it’s valued at 1.88x sales, 2.13x assets & 1.06x the equity with a 15.5% profitability. Yield is cheap, 4%. We increase our forecast cashflow from Rp1.6tn to Rp2tn which at 1.6% with a 0.5x adjustment gives a higher target price, Rp3,600.
The balance sheet is in net debt because of previous negative cashflow. The debt has been around Rp4tn the last few years as positive cashflow has gone to equity rather than paying debt. But in 2Q net debt fell to Rp3.87tn. With our cashflow forecast & a Rp651bn dividend, net debt will fall to Rp2.46tn in the next 12 months.
Profit
Despite the drop in sales, net profit was higher than a year ago because of FX gains. Without that & because of the sales decline, the cash cost ratio, net profit add depreciation & FX minus sales as % of sales was higher at 69%. We use the 12 month average 68% to predict next 12 months profit Rp2.36tn, +10.2%.
Value
MNCN has become a payer of capital & we see the payments accelerating this next 12 months. At Rp15.2tn, it’s valued at 1.88x sales, 2.13x assets & 1.06x the equity with a 15.5% profitability. Yield is cheap, 4%. We increase our forecast cashflow from Rp1.6tn to Rp2tn which at 1.6% with a 0.5x adjustment gives a higher target price, Rp3,600.
