Ad Spending in 2018 Predicted to Up 15%, Stocks of Media Companies Promising


JAKARTA, – The mass media industry that had slumped in the past year, in line with the low purchasing power of people impacting the economy, seems to have ended. This year is a lucrative momentum for the media industry as it will be greeted with major events at home and abroad.

According to Bahana Sekuritas, the growth of advertising spending this year will be in the range of 13%-15%, high enough compared to the last year’s advertising spending which was only in the range of 3%-5% due to the low purchasing power which made some companies, especially fast moving consumer goods (FMCG) producers refrained from using its advertising expenditure amidst the turmoil of political atmosphere in the first half of 2017.

According to Senior Analyst of Bahana, Henry Wibowo, there are three main factors that make the companies will increase their advertising spending in 2018. The first is World Cup in June and Asian Games in August. The second is better purchasing power of the people and the third is technology-based companies such as Tokopedia, Traveloka and Shopee will be more aggressive in their advertisements. These factors prompted Bahana to raise the rating of media stocks from Neutral to Overweight.

Bahana recommends buy for PT Surya Citra Media (SCMA), given its market share rose quite high to 36% in January, compared with 24% last year. The price target of SCMA has been doubled in the last two months from Rp2,830/share to Rp3,160/share.

“The company has also been successful in increasing its business content through its subsidiary IEG over the last two years, especially after acquiring Sinemart Production House in December 2016, by selling the content to the third parties outside its own business group such as Cinema 21, Netflix, and Iflix,” said Henry.

Bahana also recommends buy for the shares of Visi Media Asia (VIVA) with a target price of Rp620/share since the company has successfully promoted ANTV through the content of Indian dramas and local soap operas. Both contents successfully compete with tier-1 TV programs of RCTI and SCTV. The company will also refinance the second phase of its debt of US$250 million by issuing global bonds with a lower interest rate.

The other media recommended buy is Media Nusantara Citra (MNCN) or better known as MNC group, with a target price of Rp2,000/share. Similar to SCMA, the company owned by Hary Tanoesoedibjo tycoon has also started selling its content to the third parties through MNC Pictures. It also plans to conduct initial public offering (IPO) for the MNC Pictures this year. (DTK/TPP)