MNCN’s share price has underperformed YTD on weak ad revenues and overhang from potential regulatory prohibitions of cigarette advertisement on TV/radio (cigarette sector contributes c6% of MNCN’s revenues). We believe it is, however, too early to bottom fish.
Weak demand trends have continued in 3Q15 with no signs of a recovery in the near term amid a weak macro environment. We are building in some improvement in FY16E (+15% earnings growth) following a 9% decline in FY15E earnings, but would only get more constructive on the name if we get more evidence of demand turning.
Pricing cuts are a key source of downside risk. Stay Neutral with a revised Jun-16 TP of Rp2,200.