Singapore Press Holdings (SPH)

SPH Reit is very roughly 3/4 FCT and 1/4 Plife . Crunching the numbers based on last quarter for FCT and Plife with this mix gives about 5.5 - 5.7% (with or without retained earnings for FCT).

SPH Reit's forecast for this year is 5.6-5.8% depending on pricing. So very roughly about there. (Frankly surprised that they could conjure up these numbers with very decent gearing based on data they publicly released previously. Thought they would need to have more aggressive gearing to get to these numbers.)

Believe Ben is making a public appearance tomorrow, so if some more tapering talk, then this equation could change again as FCT and Plife gets repriced..... or

Nevertheless the underwriters will soak it all up in the worst case.

(10-07-2013, 12:48 AM)swakoo Wrote: SPH Reit is very roughly 3/4 FCT and 1/4 Plife . Crunching the numbers based on last quarter for FCT and Plife with this mix gives about 5.5 - 5.7% (with or without retained earnings for FCT).

SPH Reit's forecast for this year is 5.6-5.8% depending on pricing. So very roughly about there. (Frankly surprised that they could conjure up these numbers with very decent gearing based on data they publicly released previously. Thought they would need to have more aggressive gearing to get to these numbers.)

Believe Ben is making a public appearance tomorrow, so if some more tapering talk, then this equation could change again as FCT and Plife gets repriced..... or

Nevertheless the underwriters will soak it all up in the worst case.

Why PLife? Different assets class leh...

(10-07-2013, 01:01 AM)KopiKat Wrote: Why PLife? Different assets class leh...

From pg 95 of IPO prospectus, Paragon Medical takes up a portion of total gross income. I did a recalculation and sorry it should be 15% based on gross. So with 85% FCT and 15% Plife, the mix is 5.7-5.9%.

But perhaps you may not regard medical suites as same as hospital?

(10-07-2013, 01:13 AM)swakoo Wrote:

(10-07-2013, 01:01 AM)KopiKat Wrote: Why PLife? Different assets class leh...

From pg 95 of IPO prospectus, Paragon Medical takes up a portion of total gross income. I did a recalculation and sorry it should be 15% based on gross. So with 85% FCT and 15% Plife, the mix is 5.7-5.9%.

But perhaps you may not regard medical suites as same as hospital?

Thx! I better go read the prospectus in detail. Lazy... was thinking of doing that only after they finalise it ...

FCT forward yield is probably close to 6.2% than this.

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(10-07-2013, 12:45 AM)dtane Wrote: In my opinion, you would be better off buying SPH itself rather than the REIT if we ignore the valuation factor of SPH and just focus on yield.

Dividend for the past 8 years :

2012 - S$0.24
2011 - S$0.24
2010 - S$0.31
2009 - S$0.26
2008 - S$0.27
2007 - S$0.32
2006 - S$0.27
2005 - S$0.31

Assuming minimum dividend of S$0.24 based on closing price of S$4.26, SPH yield would be 5.63%.

Furthermore after listing the REIT, SPH is giving out S$0.18 dividend per share and this is 4.22% one-off yield.

perhaps would you comment on the media component which is likely to moderate down vs the REIT is likely to move up with GDP. seems the REIT is the best thing of SPH.

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here is something interesting.

the cap rate of clementi mall is at 5%. and they have a landlease of 96 years left.

the lowest cap rate of fct mall is at 5.5% (causeway point) and that have a land lease of 76 years.

base on this the value of clementi should be higher than that of any of FCT's mall isnt it.

Extracts From CIMB...

... Our internal book-building will close 15 July (Monday), 12pm. However, we reserve the right to close the book earlier should demand be overwhelming.

... Price Range:
$0.85- $0.90 per unit

... Distribution Yield:
5.58-5.79% FY2013 (Aug year-end)
5.79-6.00% FY2014 (Aug year-end)
5.65-5.86% CY2013

... Indicative Timeline:
Institutional Bookbuilding: 10-16July
Pricing: 16 July
Public Offer: 17 July - 22 July (12nn)
Listing: 24 July

(10-07-2013, 01:35 PM)NTL Wrote: Extracts From CIMB...

... Our internal book-building will close 15 July (Monday), 12pm. However, we reserve the right to close the book earlier should demand be overwhelming.

... Price Range:
$0.85- $0.90 per unit

... Distribution Yield:
5.58-5.79% FY2013 (Aug year-end)
5.79-6.00% FY2014 (Aug year-end)
5.65-5.86% CY2013

... Indicative Timeline:
Institutional Bookbuilding: 10-16July
Pricing: 16 July
Public Offer: 17 July - 22 July (12nn)
Listing: 24 July

Just to add, from Prelim Prospectus,

Aggregate Leverage = 31.3% @ $0.85 ; 27.3% @ $0.90
NAV = 84.28ct to 89.23ct ie. Premium = 0.86%

Shareholders
- SPH 72.2% / 70% (on over-allotment)
- NTUC Fairprice Co-op 2.7%
- NTUC Income Co-op 2.7%
- Cornerstone 10% (Great Eastern Life ; Hong Leong Asset Mgmt ; Morgan Stanley Asset Mgmt ; Newton Investment Mgmt ; Norges Bank - None >5%)
- Public + Institution 12.4% / 14.6% (on over-allotment)

Hi Drizzt,

My thoughts on why it is better to buy SPH is because after spinning off the properties into the REIT, SPH’s gearing drops to 9% from 40% and they now have a huge cash pile to build up more malls or to reinvest into other ventures. Furthermore they can gear themselves up to 40% or more again if they wish to, therefore with the cash pile of S$757,743,171.34 (after giving S$0.18 special dividend) and a possibility to gear up again to 40% approximate cash of S$720,769,220 (31% increase in gearing), they have S$1,478,512,391.34 to reinvest.

Total number of shares = 1,612,537,937 (Ordinary + Management + Treasury)

Ungeared Cash increase per share = S$0.4699

If we assume a conservative 4% yield / return on this amount, it is an additional S$70,750,768.80 (with gearing) and without increasing gearing to 40%, it can be an additional S$41,920,000 profits.

Ungeared possible increase in earning per share = S$0.02599

As a REIT manager after spinning off the properties, SPH will have recurring fees based on 2012 values of :

0.25% per annum of the value of deposited Property (S$3,070,500,000) = S$7,676,250

5% NPI (S$137,615,000) = S$6,880,750

0.75% - 1% for Acquisition = S$0

0.5% Divestment = S$0

Dividend from REIT without income support – 2,500,995,000 units – SPH owns 1,750,697,000 which will generate dividend of S$0.04815 per unit (5.35%) = S$84,296,060.55

Total amount of profit before tax generated is S$98,853,060.55 this is quite close to the current profit before tax which SPH is receiving in 2012 of S$99,970,000.

Therefore if SPH can make good use of the cash pile they have, their recurring pre-tax profit can be more than what they would have made if they did not spin off.

On that reason, it is my opinion that it is better to buy SPH.

Now as to the declining profits from the media segment, the drop will not be too drastic looking at the past 5 years and excluding year 2009.

2011 to 2012 drop 8.34%

2010 to 2011 increase 0.25%

2008 to 2010 drop 1.60%

Furthermore SPH has significant free cash flow which gives them a lot of leeway to invest in more properties if they wish to.

Hmm i hope what i have written makes sense.

(10-07-2013, 03:23 PM)dtane Wrote: Hi Drizzt,

My thoughts on why it is better to buy SPH is because after spinning off the properties into the REIT, SPH’s gearing drops to 9% from 40% and they now have a huge cash pile to build up more malls or to reinvest into other ventures. Furthermore they can gear themselves up to 40% or more again if they wish to, therefore with the cash pile of S$757,743,171.34 (after giving S$0.18 special dividend) and a possibility to gear up again to 40% approximate cash of S$720,769,220 (31% increase in gearing), they have S$1,478,512,391.34 to reinvest.

Total number of shares = 1,612,537,937 (Ordinary + Management + Treasury)

Ungeared Cash increase per share = S$0.4699

If we assume a conservative 4% yield / return on this amount, it is an additional S$70,750,768.80 (with gearing) and without increasing gearing to 40%, it can be an additional S$41,920,000 profits.

Ungeared possible increase in earning per share = S$0.02599

As a REIT manager after spinning off the properties, SPH will have recurring fees based on 2012 values of :

0.25% per annum of the value of deposited Property (S$3,070,500,000) = S$7,676,250

5% NPI (S$137,615,000) = S$6,880,750

0.75% - 1% for Acquisition = S$0

0.5% Divestment = S$0

Dividend from REIT without income support – 2,500,995,000 units – SPH owns 1,750,697,000 which will generate dividend of S$0.04815 per unit (5.35%) = S$84,296,060.55

Total amount of profit before tax generated is S$98,853,060.55 this is quite close to the current profit before tax which SPH is receiving in 2012 of S$99,970,000.

Therefore if SPH can make good use of the cash pile they have, their recurring pre-tax profit can be more than what they would have made if they did not spin off.

On that reason, it is my opinion that it is better to buy SPH.

Now as to the declining profits from the media segment, the drop will not be too drastic looking at the past 5 years and excluding year 2009.

2011 to 2012 drop 8.34%

2010 to 2011 increase 0.25%

2008 to 2010 drop 1.60%

Furthermore SPH has significant free cash flow which gives them a lot of leeway to invest in more properties if they wish to.

Hmm i hope what i have written makes sense.

Cannot agree more. Realise their value of real estate when prices are high, sits on cash pile, re-deploy the resources when asset prices are lower - maybe next few years. Sounds like a sensible management to me.

hi dtane, you worked out the sums that it is likely they will leverage up to purchase an asset of 1000 mil, which at 4% will generate 40 mil.

it is up to your analysis whether the deteoriation in the media is prolong or not. and that is the crux whether it is a good invesment. an 8% drop off 300 mil is less than 40 mil but a sustainable drop you wonder if they will make up for it.

finnfinn, i dont think they will be sensible, if you judge the price they bidded Clementi mall.