Singapore Press Holdings (SPH)

The Straits Times
www.straitstimes.com
Published on Jan 15, 2013
SPH's muted Q1 results point to tough year ahead
Profit falls 6.6% but property unit and investment income are bright spots

By Melissa Tan

PUBLISHING group Singapore Press Holdings (SPH) warned of a challenging year ahead as it unveiled muted first-quarter results yesterday.

The numbers point to a tougher environment for newspapers, with the group reporting net profit of $91.1 million, down 6.6 per cent when compared with the same period a year earlier.

This was on the back of a 3.1 per cent dip in operating revenue to $322.1 million for the three months to Nov 30.

Contributions from the group's newspaper and magazine business declined, as did those from the exhibitions arm.

Turnover from newspapers and magazines slid 2.3 per cent to $263.5 million when compared with the preceding year due to lower revenue from both circulation and advertising. Circulation revenue fell 2.6 per cent to $49 million. Advertising was affected as well, with revenue down 2 per cent at $204.8 million, primarily due to fewer classified ads.

"The near-term economic outlook for Singapore remains modest," SPH said in a statement yesterday, noting that its print advertisement revenue is expected to move in tandem with the performance of the Singapore economy.

Operating revenue from SPH's other businesses, which include exhibitions, fell a sharper 34.3 per cent to $10.4 million.

The exhibitions unit took a hit in the quarter "due to certain shows being held on different dates in the comparative period", the company said in a statement. It did not specify these shows.

However, those declines were cushioned by operating revenue from SPH's property unit.

Rental income climbed 2.9 per cent year-on-year to $48.2 million due to higher rental rates from Paragon, while income from The Clementi Mall remained stable. The firm said its two retail properties, Paragon and The Clementi Mall, are fully leased and "continue to turn in a steady performance".

The Seletar Mall is expected to be completed at the end of next year, it added.

Another bright spot was investment income, which shot up 420.3 per cent to $3.1 million in the first quarter when compared with the corresponding period a year ago.

Earnings per share stood at six cents for the first quarter, unchanged from the preceding year, while net asset value per share was $1.29 as of Nov 30 last year, down from $1.39 as of Aug 31 last year.

Chief executive Alan Chan said: "The year ahead will be challenging.

"Given the uncertain economic times and the changing media consumption trends, we will monitor our cost structure carefully as we strive for a sustained performance in our core newspaper business."

SPH's share price fell one cent to close at $4.11 yesterday.

melissat@sph.com.sg

(15-01-2013, 07:55 AM)Musicwhiz Wrote: The numbers point to a tougher environment for newspapers, with the group reporting net profit of $91.1 million, down 6.6 per cent when compared with the same period a year earlier.

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Earnings per share stood at six cents for the first quarter, unchanged from the preceding year, while net asset value per share was $1.29 as of Nov 30 last year, down from $1.39 as of Aug 31 last year.

See the effect when they round up their EPS to the nearest whole number..A 6.6% drop in Net Profit becomes unchanged EPS...

For the record,
EPS (Q1 - Nov11) = 6.12ct
EPS (Q1 - Nov12) = 5.72ct

A drop of 6.67%, slightly higher than the drop in Net Profit due to a bigger shares base (despite shares buy back, more shares are being issued, likely as part of employee benefit program).

Analyst report follows to downgrade SPH

CIMB Research downgraded Singapore Press Holdings to ‘neutral’ from ‘outperform’ and cut its target price to $4.27 from $4.39, saying a weaker advertisement environment could hinder the company’s print revenue.
-- The Daily Edge

http://www.theedgesingapore.com/the-dail...utral.html

Kim Eng report on SPH 1Q result. Remains as BUY rating

SPH announced its 1QFY8/13 results, which were slightly below market expectations. Top line declined slightly by 2.6% yoy to SGD326.4m, while core earnings also declined by 9.8% yoy. However we still maintain our BUY rating and target price of SGD4.50 due to still attractive yield. We believe that ad revenue is likely to stabilize in FY13 if Singapore economy manages to recover from trough. However future growth will mainly be driven by property rental income. We recommend investors to keep invested in SPH, enjoy 6.1% yield while waiting for more potential exciting news such as property assets spin-off.

SPH's core business is slowly declining, I think in a few years time their dividends will be cut as they lack the earnings

(15-01-2013, 07:32 PM)felixleong Wrote: SPH's core business is slowly declining, I think in a few years time their dividends will be cut as they lack the earnings

I am holding a slightly different views on SPH

For the core business of newspaper and magazine, it is not a growing business for sure, but should be sustainable if done right. Transition of distribution media from physical to digital is a key hurdle in near term. Content is always in demand, and supply is ONLY from SPH. It will take some time to settle down with new platform.

SPH accumulated huge retained earnings, in the form of cash, long-term and short-term investments. It should be sufficient to cushion momentary drop in earning during the transition period, to support the dividend payout

SPH property segment will provide growth for SPH.

SPH other segment does not seem contributing now, but able to become key contributor in future e.g. OpenNet and MICE

If growth is expected to come from property, then dividends MUST be cut as some money must be saved up to buy new investment property/land. Currently, almost all earnings from SPH is declared as dividends which is not sustainable if the company wants to grow via the property segment

(16-01-2013, 11:19 AM)safetyfirst Wrote: If growth is expected to come from property, then dividends MUST be cut as some money must be saved up to buy new investment property/land. Currently, almost all earnings from SPH is declared as dividends which is not sustainable if the company wants to grow via the property segment

The growing of property segment is not a new venture, started long ago with Paragon, then Clementi mall, now Seletar mall. The book value of investment property had grown from 1.1 billion in FY08 to 2.1 billion in FY12.

Dividend paid stayed more and less the same during the period. So i guess the property growth is not funded by cutting dividend, instead by retained earning.

I have been around the Seletar area recently. Any comment or details on SPH venture in that mall ?

(16-01-2013, 12:44 PM)corydorus Wrote: I have been around the Seletar area recently. Any comment or details on SPH venture in that mall ?

There are discussion on the Seletar Mall on this thread, starting from the moment SPH acquired the land. Hope it helps

http://www.valuebuddies.com/thread-117-p...l#pid18034