KEY HIGHLIGHTS
- Revenue is contracting and no cost absorption is coming through. 2Q26 revenue fell 7.7% YoY to IDR 1,636 Bn and 1H26 13.6% to IDR 3,518 Bn. Total advertising, 54.9% of quarterly sales, fell 5.3%; Content and IP fell 16.9% after a positive 1Q; only Subscription grew, up 9.2%. Cash direct costs fell 7.7%, exactly in line with revenue, so nothing was recovered through scale — operating profit fell 34.0% to IDR 141 Bn and net profit to owners fell 59.9% to IDR 49 Bn.
- The reported gross margin collapse is an accounting reallocation, not margin loss. Gross margin appears to fall 3.4pp to 34.0%, but the driver is where depreciation sits: D&A charged to direct costs rose 44.6% to IDR 153 Bn while D&A charged to G&A fell 40.8% to IDR 60 Bn — roughly IDR 41 Bn moved across the line, with total D&A up just 2.9%. Strip D&A from both legs and the cash gross margin was flat at 43.4% against 43.4%. The same reallocation inflates the apparent 7.6pp fall in the advertising segment result margin.
- The genuine cost problem is G&A, and the same shift hides it. Reported G&A fell 7.7% and the ratio looks flat at 25.4% of revenue. Excluding the D&A that left the line, cash G&A rose 1.9% YoY against revenue down 7.7%, taking the cash G&A ratio up 2.1pp to 21.7%. Operating profit is unaffected by the reallocation because both legs sit above it, which makes the 34.0% decline the cleanest measure of the quarter.
- Treat the digital versus conventional split with care — it is not like-for-like. As filed, Ads-related fell 14.8% in 2Q26 while Non-digital rose 5.1%. But the 1H25 Ads-related base was restated down by IDR 257 Bn against the originally published accounts, from IDR 1,438 Bn to IDR 1,180 Bn, with no reconciling note, apparently moving media and talent agency revenue into Content, while Non-digital was untouched. On the original base the 2Q26 decline would be 30.8%, not 14.8%. Only total advertising, down 5.3%, is consistent on both bases.
- Tax flatters the half; the balance sheet is not the constraint. 1H26 net income of IDR 482 Bn exceeds pre-tax profit of IDR 404 Bn because of a deferred tax credit of IDR 130 Bn, of which IDR 98 Bn falls in 1Q26; 2Q26 itself carried a net tax charge of IDR 14 Bn. MNCN is close to debt-free, net debt IDR 411 Bn against equity of IDR 23,455 Bn. Valuation: LTM P/E 2.5x against a two-year mean of 3.3x, 1.3 SD below, with 2026 trading in a 2.0x–2.9x range — already repriced for the contraction. Key watch: whether total advertising stabilises, and note the FY25 base includes a IDR 388 Bn gain on the January 2025 disposal of MNC Portal Indonesia.
Regards, Aldiracita Research
