Buy Dec 2017 TP (IDR) 3,250 Consensus Price (IDR) 3,469 TP to Consensus Price -6.3% vs. Last Price +18.2%

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1 Surya Citra Media, Tbk (SCMA) Is Optimistic about Performance Improvement Less Maximum Growth SCMA closed 2016 by booking the revenue of IDR4.5 trillion (+6.7% y-y), while in Q4 2016, SCMA s revenue was IDR1.1 trillion (+7% y-y). SCMA performance in 2016 was not maximum because in 2016 SCMA s audience share decreased by 25.4% from 29.7% in Besides, SCMA s margin also decreased in Expecting Efficiency Downturn in SCMA s margin in 2016 was mainly caused by the increase in operational cost stemming on air program of Torabika Soccer Championship. The revenue growth in 2016 did not coexist with EBIT slipping down by 1.8%. However, the discontinued Torabika Soccer Championship in Q4 enabled SCMA to re-improve margin (Gross Margin of 59% in Q4 vs 55% in Q3; EBITDA Margin of 45% in Q4 vs 44% in Q3). Success of Sinemart Acquisition The success of Sinemart acquisition and the airing of Sinemart s local soap opera in February 2017 enabled SCTV to success as the leader of Audience Share. SCTV recorded audience Share of 18.1% increasing 5.5% from January. It was in inverse proportion to the prior leader, RCTI of which audience share decreased by 2.1% in the same period. It certainly will boost the growth of SCMA s advertisement revenue starting in Q Target Price of Rp3,250 We increase the target price by an estimate of forward P/E at 25.7x (-1SD below the 3 year average at 29.4x). This target price implies 2017E P/E at 26.6x. Now, SCMA is traded at 2017E P/E at 22.5x. Surya Citra Media Tbk Summary (IDR bn) 2015/12A 2016/12A 2017/12E 2018/12E Revenue 4,241 4,524 5,002 5,461 Revenue growth 4.1% 6.7% 10.6% 9.2% EBITDA 2,176 2,149 2,553 2,739 Net profit 1,503 1,479 1,781 1,940 EPS (IDR) EPS growth 3.8% -1.6% 20.4% 9.0% BVPS (IDR) EBITDA margin 51.3% 47.5% 51.0% 50.1% NPM 35.4% 32.7% 35.6% 35.5% ROE 43.6% 41.5% 44.6% 42.8% ROA 32.3% 31.5% 34.5% 33.1% ROIC 39.2% 39.1% 42.7% 42.8% P/E 30.1x 27.6x 22.5x 20.7x P/BV 13.3x 11.0x 9.4x 8.4x EV/EBITDA 20.7x 18.9x 15.6x 14.4x DPS (IDR) Dividend yield 4.0% 3.0% 3.0% 3.5% Source: Company Data, Bloomberg, NHKS Research Please see the last page for rating criteria & important disclaimer NH Korindo Sekuritas Indonesia Company Update Q4 16 Apr 17, 2017 Buy Dec 2017 TP (IDR) 3,250 Consensus Price (IDR) 3,469 TP to Consensus Price -6.3% vs. Last Price +18.2% Shares data Last Price (IDR) 2,750 Price date as of Apr 13, wk range (Hi/Lo) 3,550 / 2,130 Free float 40.0% Outstanding sh.(mn) 14,622 Market Cap (IDR bn) 40,209 Market Cap (USD mn) 3,033 Avg. Trd Vol - 3M (mn) 10.9 Avg. Trd Val - 3M (bn) 30.9 Foreign Ownership 18.2% Trade, Services & Investment Media, Television Bloomberg Reuters Arnold Sampeliling , ext:170 arnold@nhsec.co.id Share Price Performance SCMA.IJ SCMA.JK YTD 1M 3M 12M Abs. Ret. -1.8% -0.7% -1.4% -14.3% Rel. Ret. -7.8% -4.6% -7.9% -30.1%

2 Expecting margin improvement after the discontinued airing of Torabika Soccer Championship. Improving Performance in 2017 Although the revenue increased, the operational cost in 2016 increased significantly. Cost of revenue and Opex increasing significantly by 17% and 7% decreased SCMA s operational revenue. Gross margin in 2016 was 60.6% (vs 64% in 2015), while EBITDA margin was 47.5% (vs 51.3% in 2015). One factor causing downturn in SCMA s operational revenue was the airing of Torabika Soccer Championship. We oversee that the end of Torabika Soccer Championship in Q3 and the discontinued airing contract of Torabika Soccer Championship in 2017 will improve SCMA s margin. The trend of margin improvement had seen in Q4 and we expect gross margin of 64.5% and EBITDA margin of 51% in FY Audience Share FY 2016 Company Margin Q Q Source: Company, NHKS Research Source: Company, NHKS Research Positive trend of SCMA s audience share was underpinned by SCTV s new local soap opera. Positive Trend of Audience Share From the group competition outlook, MNCN with 3 TV stations still became leaders with the audience share 36.9% in 2016 and 33.2% in March However, MNCN s trend kept slipping down in contrary to SCMA showing positive trend, particularly in prime time show underpinned by SCTV s new local soap opera. All Time Audience Share by Group Mar 16 - Mar 17 Prime Time Audience Share by Group Mar 16 - Mar 17 PT NH Korindo Sekuritas Indonesia Company Research Page 22

3 Trend of SCTV s positive audience share was not followed by Indosiar. Strive for Prime Time Since the airing of Sinemart s local soap opera in February, SCTV kept showing the hike in audience share. In March, SCTV was even capable of recording audience share of 18.1% higher than RCTI s audience share of 17.2%. This hike was underpinned mainly by the hike in audience of prime time airing such Sinemart s local soap operas as Anak Langit and Berkah Cinta. Besides, having seized market share of RCTI s local soap operas, SCTV s local soap operas were also capable of seizing market share of Hindi s drama, the prominent show aired by ANTV in the same prime time. Being different from SCTV, Indosiar recorded downturn in prime time share from the average of 14.0% in 3M2016 into 11.7% in 3M2017. We oversee that the cause of this downturn was talent show aired by Indosiar, while Dangdut Academy has reached audience monotonous phase as 2017 is the fourth season of its airing. All Time Audience Share by TV Channel Mar 16 - Mar 17 Prime Time Audience Share by TV Channel Mar 16 - Mar 17 Expecting revenue growth of 10.6% in Awaiting Hike in Advertisement Revenue We estimate that in 2017, SCMA s revenue will grow around 10.6% by considering the significant hike in advertisement revenue growth starts in Q Another to the hike in revenue underpinned by the hike in audience share, we oversee that SCTV through its subsidiary, Whisper Media is capable of maximizing the advertisement revenue by airing advertisement on high rating show. PT NH Korindo Sekuritas Indonesia Company Research Page 33

4 Multiple Valuation Forward P/E band Last 3 years Dynamic Forward P/E band Last 3 years Rating and target price Date Rating Target Price Last Price Consensus vs Last Price vs Consensus 12/30/2016 Hold 3,125 2,800 3, % -3.2% 4/17/2017 Buy 3,250 2,750 3, % -6.3% Source: Bloomberg, NHKS research Analyst Coverage Rating Closing and Target Price Source: Bloomberg NH Korindo Sekuritas Indonesia (NHKS) stock ratings 1. Period: End of year target price 2. Rating system: Based on a stock s absolute return from the date of publication Strong Buy: high conviction Buy rated stocks Buy: greater than 15% Hold: between -15% and +15% Sell: less than -15% PT NH Korindo Sekuritas Indonesia Company Research Page 44

5 Summary of Financials SCMA Summary Last Price (IDR) April 13, ,750 Target Price (IDR) Dec , /12A 2016/12A 2017/12E 2018/12E Analyst: Arnold Sampeliling Rating: Buy ROE 43.6% 41.5% 44.6% 42.8% ROA 32.3% 31.5% 34.5% 33.1% INCOME STATEMENT DISCLAIMER This report and any electronic access hereto are restricted and intended only for the clients and related entity of PT NH Korindo Sekuritas Indonesia. This report is only for information and recipient use. It is not reproduced, copied, or made available for others. Under no circumstances is it considered as a selling offer or solicitation of securities buying. Any recommendation contained herein may not suitable for all investors. Although the information here is obtained from reliable sources, it accuracy and completeness cannot be guaranteed. PT NH Korindo Sekuritas Indonesia, its affiliated companies, respective employees, and agents disclaim any responsibility and liability for claims, proceedings, action, losses, expenses, damages, or costs filed against or suffered by any person as a result of acting pursuant to the contents hereof. Neither is PT NH Korindo Sekuritas Indonesia, its affiliated companies, employees, nor agents liable for errors, omissions, misstatements, negligence, inaccuracy arising herefrom. All rights reserved by PT NH Korindo Sekuritas Indonesia ROIC 39.2% 39.1% 42.7% 42.8% EBITDA/Equity 63.1% 60.4% 64.0% 60.4% In IDR bn 2015/12A 2016/12A 2017/12E 2018/12E EBITDA/Assets 46.7% 45.8% 49.5% 46.7% Net Sales 4,241 4,524 5,002 5,461 Cash Dividend (IDR bn) 1,828 1,214 1,213 1,425 Growth (% y/y) 4.1% 6.7% 10.6% 9.2% Dividend Yield (%) 4.0% 3.0% 3.0% 3.5% COGS (1,527) (1,782) (1,776) (1,989) Payout Ratio (%) 126.2% 79.3% 80.8% 80.0% Gross Profit 2,715 2,742 3,227 3,472 DER 10% 6% 6% 7% Gross Margin 64.0% 60.6% 64.5% 63.6% Net Gearing 35% 21% 27% 36% Operating Expenses (696) (743) (824) (898) LT Debt to Equity 6% 0% 0% 0% EBIT 2,049 2,012 2,423 2,600 Capitalization Ratio 9% 5% 6% 7% EBIT Margin 48.3% 44.5% 48.4% 47.6% Equity Ratio 75% 77% 78% 77% Depreciation Debt Ratio 8% 4% 5% 6% EBITDA 2,176 2,149 2,553 2,739 Financial Leverage 135% 132% 129% 129% EBITDA Margin 51.3% 47.5% 51.0% 50.1% Current Ratio 3.3x 3.0x 3.2x 3.1x Interest Expense (43) (23) (17) (19) Quick Ratio 2.7x 2.3x 2.4x 2.4x EBT 2,030 2,009 2,430 2,609 Cash Ratio 0.8x 0.5x 0.6x 0.8x Income Tax (513) (510) (619) (652) Par Value (IDR) Minority Interest (13) (20) (30) (16) Total Shares (mn) 14,622 14,622 14,622 14,622 Net Profit 1,503 1,479 1,781 1,940 Share Price (IDR) 3,100 2,800 2,750 2,750 Growth (% y/y) 3.8% -1.6% 20.4% 9.0% Market Cap (IDR tn) Net Profit Margin 35.4% 32.7% 35.6% 35.5% BALANCE SHEET In IDR bn 2015/12A 2016/12A 2017/12E 2018/12E 2015/12A 2016/12A 2017/12E 2018/12E Cash Price /Earnings 30.1x 27.6x 22.5x 20.7x Other Current Assets 2,158 2,497 2,866 3,087 Price /Book Value 13.3x 11.0x 9.4x 8.4x Total Current Assets 2,843 2,952 3,500 4,085 Price/Sales 10.7x 9.0x 8.0x 7.4x Net Fixed Assets ,043 PE/EPS Growth 7.9x -17.1x 1.1x 2.3x LT Investments EV/EBITDA 20.7x 18.9x 15.6x 14.4x Other Non Current Assets EV/EBIT 22.0x 20.2x 16.4x 15.2x Total Assets 4,566 4,821 5,497 6,225 EV (IDR bn) 44,997 40,693 39,852 39,571 Payables Sales CAGR (3-Yr) 9.0% 7.0% 7.1% 8.8% ST debt EPS CAGR (3-Yr) -6.4% 4.1% 7.1% 8.9% Other current liabilities Basic EPS (IDR) Total Current Liabilities ,101 1,301 Diluted EPS (IDR) LT Debt BVPS (IDR) Other Non Current Liab Sales PS (IDR) Total Liabilities 1,152 1,115 1,221 1,433 DPS (IDR) Shareholders' Equity 3,414 3,705 4,276 4,792 CASH FLOW STATEMENT DCF, RIM & EVA In IDR bn 2015/12A 2016/12A 2017/12E 2018/12E 2015/12A 2016/12A 2017/12E 2018/12E Net Income 1,503 1,479 1,781 1,940 DCF (IDR bn) Deprec & Amortization NOPAT 1,530 1,501 1,805 1,950 Chg. In Working Capital 101 (225) (320) (107) +Depr./Amor CFO 1,731 1,391 1,591 1,972 -CAPEX (306) (149) (147) (198) Capex (306) (149) (147) (198) -Incr. (Decr.) in Working Cap. 101 (225) (320) (107) CFI (334) (257) (271) (267) (Unlevered) FCFF 1,452 1,264 1,468 1,784 Dividends Paid (1,828) (1,214) (1,213) (1,425) WACC Net Borrowing (PMT) (167) (152) Cost of Debt (Tax Adj.) 10.0% 7.2% 6.9% 6.8% CFF (1,962) (1,373) (1,141) (1,341) Cost of Equity (COE) 11.2% 9.9% 9.8% 9.6% Net Changes in Cash (566) (238) WACC (%) 11.2% 9.9% 9.7% 9.6% RIM OWNERSHIP PROFITABILITY & STABILITY VALUATION INDEX Spread (FROE-COE) (%) 31.8% 33.4% 38.3% 35.7% Residual Income (IDR) 1,111 1,139 1,419 1,528 By Geography % Shareholders % Equity Charge Indonesia 81.8 PT Elang Mahkota Tek 60.3 EVA United States 9.1 Capital Group 2.4 Invested Capital (IDR bn) 4,044 3,770 3,913 4,552 Luxembourg 2.8 Vanguard 1.3 ROIC-WACC (%) 26.6% 29.9% 36.4% 33.2% Norway 1.3 JP Morgan Chase 1.2 EVA (IDR bn) 1,076 1,127 1,424 1,513 PT NH Korindo Sekuritas Indonesia Company Research Page 55