Singapore Press Holdings (SPH)

(26-08-2013, 02:03 PM)safetyfirst Wrote:

(26-08-2013, 10:35 AM)felixleong Wrote: Warren buffett has been buying a lot of newspaper businesses in US
But he's only paying around 5 times earnings, which I think is still very attractive valuations

haha i like this... many people always quote buffett when they want to want to rally behind sph, but they fail to realise that buffett buys at 5 times earnings pretax, and perhaps 7 times earnings aftertax, but at the current price of sph, buying into it is easily like 15 times earnings for its media business and if you pay 15x earnings for a business with declining profits, hmmm, it's too risky for me.

Not to forget, at least 50% of its net profits come from its media business which is still a signifcant percentage. As for its supposedly growth business in developing malls and reiting them, well, many other developers in singapore are also doing that. Does SPH really have a clear edge above the rest? Not really

SPH is not only mediocre, at its current price, it is bad. (this is just my opinion, so dont attack me personally, attack my opinions)

Do the newspaper companies that buffett buy maintain a monopoly in their respective countries?

(26-08-2013, 01:24 PM)specuvestor Wrote: SPH pays about $400m in dividend every year. "Soon" will be based on whether their Operating cashflow excluding disposals can fund this.

One important note on OCF account of SPH, it is after debit off the dividend paid.

E.g. in FY2012, OCF is S$71 mil, after deducted dividend paid of S$386 mil, among other normal deduction.

IMO, dividend payout seems a fixed "expense" of SPH...

(26-08-2013, 02:48 PM)momoeagle Wrote:

(26-08-2013, 02:03 PM)safetyfirst Wrote:

(26-08-2013, 10:35 AM)felixleong Wrote: Warren buffett has been buying a lot of newspaper businesses in US
But he's only paying around 5 times earnings, which I think is still very attractive valuations

haha i like this... many people always quote buffett when they want to want to rally behind sph, but they fail to realise that buffett buys at 5 times earnings pretax, and perhaps 7 times earnings aftertax, but at the current price of sph, buying into it is easily like 15 times earnings for its media business and if you pay 15x earnings for a business with declining profits, hmmm, it's too risky for me.

Not to forget, at least 50% of its net profits come from its media business which is still a signifcant percentage. As for its supposedly growth business in developing malls and reiting them, well, many other developers in singapore are also doing that. Does SPH really have a clear edge above the rest? Not really

SPH is not only mediocre, at its current price, it is bad. (this is just my opinion, so dont attack me personally, attack my opinions)

Do the newspaper companies that buffett buy maintain a monopoly in their respective countries?

What he bought are regional newspapers, papers that focus on suburban local news most likely. These news according to him will always be necessary, kinda like Singapore which is keeping up with local news.

And of course another thign like felix said is that they been beaten down drastically so he has a margin of safety.

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(26-08-2013, 03:13 PM)CityFarmer Wrote:

(26-08-2013, 01:24 PM)specuvestor Wrote: SPH pays about $400m in dividend every year. "Soon" will be based on whether their Operating cashflow excluding disposals can fund this.

One important note on OCF account of SPH, it is after debit off the dividend paid.

E.g. in FY2012, OCF is S$71 mil, after deducted dividend paid of S$386 mil, among other normal deduction.

IMO, dividend payout seems a fixed "expense" of SPH...

they are a miniority accounting that way. i wonder if that is a valid accounting practice.

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(26-08-2013, 02:03 PM)safetyfirst Wrote:

(26-08-2013, 10:35 AM)felixleong Wrote: Warren buffett has been buying a lot of newspaper businesses in US
But he's only paying around 5 times earnings, which I think is still very attractive valuations

haha i like this... many people always quote buffett when they want to want to rally behind sph, but they fail to realise that buffett buys at 5 times earnings pretax, and perhaps 7 times earnings aftertax, but at the current price of sph, buying into it is easily like 15 times earnings for its media business and if you pay 15x earnings for a business with declining profits, hmmm, it's too risky for me.

Not to forget, at least 50% of its net profits come from its media business which is still a signifcant percentage. As for its supposedly growth business in developing malls and reiting them, well, many other developers in singapore are also doing that. Does SPH really have a clear edge above the rest? Not really

SPH is not only mediocre, at its current price, it is bad. (this is just my opinion, so dont attack me personally, attack my opinions)

one is a 20% earnings yield declining slowly, but it is still a very good yield vs risk free.

for SPH it is a 6.6% earnings yield declining slowly.

the investors will have to ensure that the 6.6% do not decline much.

wasn't aware of this but my friend brought this up to me tonight. it seems stomp had a redesign to be more "serious". http://www.stomp.com.sg/

i wonder if SPH is starting to be serious about their other mediums.

(26-08-2013, 10:36 AM)momoeagle Wrote: Kopikat, I concur with your post. In summary,
1) It is not a growth stock. Unlikely to be in the foreseeable few years
2) Not a wide moat at a great price. But to me, the moat is big enough that there won't be any other local newspapers company.
3) Future boils down to planning and execution, highly agreed.
4) At the right price, attractive to different group of investors yup


Drizzt, I agree staff costs rise with inflation. In a way, I view it this way, SPH ad revenue is pretty consistent, indicating that its market is pretty saturated. Readership is perhaps at its maximum since it is the sole official newspaper, which concurs on being unable to improve on monetization. Ad revenue being in tandem with GDP, is to me a non-growth core business.

Years ago, Singapore was attempting to introduce competition by letting MediaCorp enter newspaper business, and SPH enter TV Media. In the end, it didn't succeed, which to me points to a natural monopoly for both businesses.

But like Kopikat says, key thing is, at the right price, it is still attractive to different people with different objectives

i think i wouldn't call it the right price. It is more like folks see this "natural monopoly" as a defensive factor for it to command a higher free cash flow yield.

and we probably get a 6.6% free cash flow yield for it.

in investing when we try to spot an "equity bond" investment such as this, we ask can we find a better asset that have this same risk or lower but yields more. I wonder if forumers are able to find a better prospective one.

perhaps if u cannot, this is a "safe money parking investment"

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(26-08-2013, 10:45 AM)KopiKat Wrote:

(26-08-2013, 09:52 AM)Drizzt Wrote: Kopikat, so you see this as a business that grows with GDP or a zero growth business.

It's still very much an economy-driven kind of stock. Their Media biz is mainly a conduit for the bigger Advertising biz and this is very much dependent on the state of the economy. As for the growing Property segment, there ought to be a time lag (plus averaged out ie. swings are less sudden) to the state of the economy as rental reversions are typically well spread out over a number of years (except at the beginning stage like Clementi Mall). So, very much GDP driven and any growth will likely have to come from other areas eg. Property.

Quote:With the cash holding, what kind of acquisition will make most investment sense.

In the past, my dream was the creation of a Media Powerhouse (like News Corps), to be first created with a merger with MediaCorps.... I had high hopes when Tony Tan was appointed as the new Chairman back then... However, I now realised that this is an almost impossible dream due to political (internal, domestic and regional) reasons.

Further, looking at their recent past investment track records, IMO, the lesser evil is to continue to invest into Malls or possibly even Office assets. For Media related biz, till date, I don't see them becoming a serious contender in the online arena. Perhaps, they're being very cautious so that it won't cannibalise their current, profitable offline model?

PS. My views are not set in stone. It changes as the story develops and if new twists and plots surfaces... eg. recent IPO of SPH REIT.

i would have thought that with the recent moves by Temasek or GIC investment in Tudou they would have taken this approach, but i guess it turned out to be an investment with no local synergy.

if they want more local synergy, perhaps taking a larger stake in M1 would create a sizeable distribution channel. would selling circulation to a large group of phone subscribers appeal? phone subscribers get lower cost for premium local news content, sph gets a ready source of subscribers.

it is peculiar that with Singtel exploring new advertising platform to tap mobile SPH not doing some adquistion to improve their current signal to ads to create a better publisher-advertiser network. that can be a relatively less dear acquisition.

else the property rental route will be what they do. if they are like Washington Post, following the buffett way of capital allocation, any form of investment is good if it generates recurrnig revenue, perhaps even steel distribution, import and export if they can find a really good one.

The thing is that it doesn't have to be within synergy or core competency as long as they can decentralize it and keep the management. often when bought over management is less motivated.

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It’s not uncommon for an industrial company to seek some glitz by buying into media and entertainment. Washington Post Co. WPO -0.11% may be the only media company going in the other direction—adding soot and grease. The company on Thursday said it is buying a maker of parts for industrial furnaces from United TechnologiesCorp. UTX +0.48%. The decidedly un-glitzy deal is in keeping with a strategy of investing in companies that have strong earnings potential, said Post Chairman Donald Graham.Washington Post didn’t disclose the price it is paying for Forney Corp., an 86-year-old supplier of parts and systems for industrial utilities like power plants. But Mr. Graham, in an interview, described Forney as a “small acquisition.”

Forney’s specialties include making igniters and flame detectors for industrial-grade fuel burners, a far cry from the newspapers, television and education businesses that account for the bulk of the Post’s businesses. Then again, some of those businesses have seen sharp declines in recent years: Post Co.’s cash cow, the Kaplan higher education unit, and its namesake newspaper each booked operating losses last year.

Last year, the company made a similar tiny diversification with the acquisition of a majority stake in Celtic Healthcare Inc., a provider of hospice and home health-care services. Mr. Graham later told investors Post Co. doesn’t “plan to become a giant in the health-care field. We plan to acquire every time we can [find] well-run businesses that … can contribute some profit meaningfully to the Washington Post Company.”
In the same vein, General Electric Co. GE +0.38% doesn’t need to worry about competition from Washington Post Co. anytime soon. Forney “doesn’t represent a new path” for Post Co., Mr. Graham said.

On Thursday he described Forney as a company with “a long record of profitability, excellent management and a good reputation.”

Owning a range of businesses is a philosophy that bears more than a passing resemblance to that of Warren Buffett, whose Berkshire Hathaway BRKB +0.79% is a big shareholder in Post Co. and who was a longtime board member and remains close to the Graham family.
Mr. Graham played down any similarity but acknowledged that Mr. Buffett’s investing philosophy might have “rubbed off” on everyone who worked with him.

Some investors, at least, appeared unimpressed. Brad Sanfalow, founder of research firm PAA Research LLC, described the deal by Post Co. as an “indictment of their current asset base” and a move “well outside of their core competencies.”
Post Co. shares finished Thursday at $515.50, down 56 cents.

(26-08-2013, 10:57 PM)Drizzt Wrote: wasn't aware of this but my friend brought this up to me tonight. it seems stomp had a redesign to be more "serious". http://www.stomp.com.sg/

i wonder if SPH is starting to be serious about their other mediums.

Base on observation, SPH is serious to revamp its "Other" segment.

(27-08-2013, 09:25 AM)CityFarmer Wrote:

(26-08-2013, 10:57 PM)Drizzt Wrote: wasn't aware of this but my friend brought this up to me tonight. it seems stomp had a redesign to be more "serious". http://www.stomp.com.sg/

i wonder if SPH is starting to be serious about their other mediums.

Base on observation, SPH is serious to revamp its "Other" segment.

wondering if you are seeing the same for sgcarmart or hardwarezone

Allow me to share a very candid pov on sph.

Sg has increasingly greying population. If you are of some age you will realise u dont really like to read anything intensive on the mobile devices. Plus your eyesight is deteriorating.

So the printed material still has some relevance. And you dont need to be tech savvy.

That said, a lot of old folks are picking up IT skills and what not. And larger displays of tablets with super fine resolution are becoming ubiquitous.

[Image: fRrGXv8.jpg]

I noticed that SPH is promoting interactive book, with its first on "Myanmar Sunrise", with its Apple App. It is a nice move to consolidate and re-package the valuable articles, into a new product.

I am not an Apple fan, and it is only available in Apple App, otherwise I will buy it.