Singapore Press Holdings (SPH)

[Corgitator]

well, the market is taking SPH's declining profits in its media business more seriously now

Almost 2 years later, back to review SPH, trading at 2.38 recently, i still thinking it is trading at a unjustified premium. Annual profit is still dropping, leverage has gone up, dividend per share is showing signs of a gradual decrease, and imo, it is trying very hard to grow profits through the aged care and student accomodation, not sure if this is its area of expertise, and it also appears to be capital intensive. If it is to be valued as a property development/investment business, it is trading above its NAV, but most property development companies or reits in singapore are trading below their NAV. I would still give it a pass at today's price

For years, i have been suggesting that SPH is not worth its premium. And i am so critical of it because it is part of the index, a supposed blue chip. Many uncles aunties will just buy it blindly. Now that it is going to be out of the index, i wont bother to track it anymore. 


Today it is trading at around $1.35. About 3/4 years ago, it was trading for more than $3. Serious value destruction to many innocents who bought it in the first place because it is called a blue chip. i always hold the view that blue chips have to live up to their 'reputation'

Thanks money, for tracking back your thoughts stretching back the last 3.5years.

To enter the STI index, the criteria is it must be one of the highest market cap company on SGX mainboard listing, followed by sufficient trading liquidity and free float. There isn't any "quality" perspective over here. As a reference, the S&P 500 and DJIA inclusion criteria is also quite similar, with size as the main criteria. Although the S&P 500 has a profitability criteria but if we were to superimpose SPH's scenario, it doesn't help because SPH has been profitable (abeit, getting less and less profitable).

https://corporate.sph.com.sg/system/asse...endix3.pdf

When you are in some index, it doesn't mean you are a "quality" company. It only means you are a large company. So all in all, i think the word "blue chip" is really a heuristic that one has to avoid or suffer at their own cost - whether uncles aunties or anyone.

We shouldn't even have a "blue chip" description per say in the first place. Just focusing on the STI index for the last few years, we can see ex-index constituents like Noble and Hutchinson Port Trust....I am quite sure that they haven't lived up to reputation. I think it is better for us not to assume any company has to "live up to their reputation". "Reputation" is a meaningless framework that we create ourselves and is not meaningful at all but it serves as another heuristic.

Hi Weijia
Being included in an index has some "reputational value" as index funds and institutional funds will buy in.
On the contrary, the stock that is removed from the index is usually underperformed and  come under further selling pressure.

Stocks that are removed from an index are often a red flag. Noble is a good example.  In the long term, stock index is usually on an upward trend as it keeps "rebalancing" every quarter or every two quarters. There is a kind of selection process, weeding out the weaker ones and coopting the strong ones. That probably explains why index stocks are regarded as blue chips. For the same reason,  WF is asking people to buy S&P ETF.

I wouldn't call it reputational value. As Wei has pointed out, index constituents are simply the larger companies. A company will enter the index when the market cap gets big enough - i.e. more likely than not, the share price had a good run, whether justified or not. Case in point, look up China Ding Yi Feng, any sensible investor can tell that the company is dodgy if you go through the financials. However, the share price kept going up, and ended up being included in the index, which then led to more capital inflows, propping price up. When the bubble burst, it was a swift decline. Bottom line is, index inclusion doesn't necessarily mean quality.

I would instead call it a benchmark premium, because certain funds (both index funds and mutual funds) are compelled to only invest in index constituents. So there's going to be higher institutional demand, leading to a premium in valuation.

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19 June 2020 Update on Streetsine Judicial Management SPH
https://links.sgx.com/FileOpen/Updates%2...eID=619717

As stated in the JM Announcement, SSTG and SSPL are not significant subsidiaries of SPH, and the above-stated court applications do not have a material impact on the Company’s operations for the current financial year ending 31 August 2020.
The hearing for the IJM Applications (as defined in the JM Announcement) has been fixed
for 22 June 2020. The Company will keep the shareholders informed of the progress of the matter and will make further announcements, when appropriate.

I felt rather sad as given a chance, Streetsine could provide a strong digital platform for SPH.
Sad, very sad that it's developing into such a sad situation.
FYI on the initiate purchase:
https://www.theedgesingapore.com/sph-buy...30-million

Stay home and stay safe, valuebuddies.

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29 June 2020 82 Genting Lane - new Data Centre
https://links.sgx.com/FileOpen/SPH%20Ann...eID=621588

Keppel 60% + SPH 40%

Wear mask and keep your distance, everyone.

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7 July 2020 Litigation update SPH
https://links.sgx.com/FileOpen/Update%20...eID=622948

The Company wishes to update that on 7 July 2020, the Company and SPHI filed an amended Defence and Counterclaim, and Mr Jason Barakat-Brown (“Mr Barakat-Brown”) filed an amended Defence, to the Claim. This is following from the Plaintiffs obtaining leave of Court on 16 June 2020 to join Mr Leslie Fong Yin Leong (“Mr Fong”) as the fifth defendant to the Claim, and to further amend their Writ of Summons and Statement of Claim. In their amended Statement of Claim, the Plaintiffs have alleged, amongst other things, that Mr Fong, who is the Chairman of StreetSine Technology Group Pte Ltd (formerly known as CoSine Holdings Pte Ltd) (“SSTG”), is a party to the alleged unlawful means conspiracy together with the Company, SPHI and Mr BarakatBrown to cause SPHI to breach the terms of a shareholders’ agreement and/or carry out acts of oppression against the Plaintiffs. The Plaintiffs also further allege that Mr Fong has acted in breach of his directors’ duties and exercised his powers as Chairman and director of SSTG in a manner which was oppressive to the Plaintiffs.
As at the date of this announcement, Mr Fong has not filed his Defence, and the Plaintiffs have not filed their Replies to the Defences filed by the Company, SPHI and Mr Barakat-Brown.

Wear mask and keep your social distance, everyone.

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13 July 2020 Update from SPH
https://links.sgx.com/FileOpen/SPH%20Cor...eID=623451

• Due to the impact of Covid-19, operating profit for the year ended 31 Aug 2020 (FY20) is expected to be significantly lower than the S$187 million recorded in FY19
  
• The Group will conduct a revaluation of its investment properties as at 31 Aug 2020. Covid-19 is expected to negatively impact the revaluation outcome
  
• The Group expects to release its FY20 financial results in early Oct 2020
  

Wear mask and keep your social distance, everyone.

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Singapore Press Holdings Limited (the "Company") had, on 24 February 2020, announced that it

had, through Straits Himawari TMK One Tokutei Mokuteki Kaisha and Straits Himawari TMK Two
Tokutei Mokuteki Kaisha (“TMK Two”), entered into five purchase and sale agreements, all dated 
21 February 2020 (collectively the “Purchase Agreements”), to acquire five aged care assets in Japan.
Two of the five Purchase Agreements were entered into by TMK Two (the “TMK Two Purchase
Agreements”), and are in respect of the following assets:
(i) Li-Fe-Le Nishioka; and
(ii) Kagayaki Heiwadori,
(collectively, the “TMK Two Assets”).
The Company is pleased to announce that all the conditions precedent under the TMK Two Purchase
Agreements have either been satisfied or waived, and that the purchase of the TMK Two Assets has
been completed today.

https://links.sgx.com/FileOpen/Completio...eID=627300

Stay home and stay healthy, valuebuddies.

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SPH $8m retrenchment cost for 140 - 4Q2020

Mr Ng Yat Chung, CEO of SPH, said: "Subscriptions and readership of our news titles have increased since the onset of Covid-19. However, the economic downturn has significantly impacted our advertising revenue. A more integrated approach of producing and selling our content across our various platforms will allow us to deal more efficiently and effectively with the new level of demand we are seeing from our advertisers and audience."


Stay home and stay healthy, everyone.

[Shiyi]

Newspapers make money from advertising revenue, not from subscription or readership.
In fact, more subscription means more revenue lost, as the subscription revenue won't be able to cover the cost of printing and delivery. Subcription number is meaningful only if it translates into ad revenue.

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Singapore Press Holdings Limited wishes to announce that it will release its financial results for the full year ended 31 August 2020 on Tuesday, 13 October 2020.

Stay home and stay safe, everyone.

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FY result as at 31 Aug 2020
Total Revenue    $954m (vs  977m)
Operating Profit $110m (vs  186m)
Net Loss        $112m (vs +259m)
Div              1cts  (vs 5.5+1)
https://links.sgx.com/FileOpen/SPH%20SGX...eID=635068

12.1 The Media business continues to be challenged with the decline in print advertisements as Covid-19 intensified the structural decline in the advertisement sector. The digital transformation strategy is seeing progress in terms of improved circulation growth from digital subscriptions. Media will continue with its digital transformation roadmap and a disciplined approach to cost management. 

12.2 In the Property segment, tenants in the retail malls in Singapore and Australia have been affected by lower footfall due to strict social distancing measures. The Group will continue to monitor the Covid-19 situation and work closely with tenants to overcome the challenges ahead, while operating the retail malls with precautionary safe distancing measures. 

12.3 The Group will progressively take over and manage in-house the entire PBSA portfolio in FY2021. Amid the Covid-19 outbreak, the Group has been proactive in rolling out various measures to protect the residents and PBSA staff and will continue to observe the evolving situation in UK closely. Armed with full operating capabilities, SPH will continue to look for new opportunities in this sector. 

12.4 The Group expanded its footprint overseas with the S$66 million acquisition of aged care assets in Japan consisting of a total of 365 beds across five assets in FY2020. Undergirded by the secular trend of a worldwide aging population, the Group will continue to develop Aged Care as a key business pillar while monitoring the Covid-19 situation before considering further investments.


Stay home and stay safe everyone.