Singapore Press Holdings (SPH)

[violinist]

When S Chips started to list in SGX, i KK tried to be a faked "Angel Investors". i bought 2 lots to 5 lots of the some so called "better S Chips" where even F&N is/was also a share holder or much more reputable S CHIPS. Till today only 2 makes some money. The rest dived into the sea or is in the process of diving.

fungus?

[Temperament]

When S Chips started to list in SGX, i KK tried to be a faked "Angel Investors". i bought 2 lots to 5 lots of the some so called "better S Chips" where even F&N is/was also a share holder or much more reputable S CHIPS. Till today only 2 makes some money. The rest dived into the sea or is in the process of diving.

fungus?

Ya lol. The inedible poisonous species out of 75,000 known species.

[CityFarmer]

Interesting news. Any impact on ebook or newspaper industry? The technology is around for sometime. I hear it around year 2001, it is from IBM reseach lab. Now it is in mass production from LG

http://it.zaobao.com.sg/pages10/itech120402.shtml

[Musicwhiz]

If not for rental income, SPH's profit would have been flat. How will they grow revenues in their core business? 7 cents/share interim, same as last year. (Not Vested)

The Straits Times
Apr 14, 2012
SPH's net profit rises by 11.6%
Jump in rental income in second quarter

By Melissa Tan

HIGHER rental income helped media group Singapore Press Holdings post an 11.6 per cent jump in net profit for the second quarter.

Earnings came in at $84.1 million for the three months to Feb 29, while operating revenue gained 3.7 per cent to $298.5 million, from the same period a year ago.

Net profit for the six months to Feb 29 increased by 2.2 per cent to $181.6 million as operating revenue rose 4 per cent to $630.9 million year-on-year.

Turnover for the second quarter from the newspaper and magazine business, the main component of SPH revenue, remained flat at $234.5 million, inching up 0.1 per cent.

Print advertisement revenue grew 0.8 per cent to $177.6 million, offsetting a 1.1 per cent fall in circulation revenue to $49.7 million.

While newsprint costs went up 3.5 per cent, that was 'cushioned by a favourable exchange rate', SPH said.

It noted that staff costs fell 0.3 per cent, or by around $300,000, due to lower variable bonus provision partially offset by salary increments.

Rental income leapt 21.6 per cent to $48 million. Rent from Clementi Mall, which officially opened early last year, totalled $9.2 million while Paragon's contribution rose 1.7 per cent, or about $700,000, on the back of higher rates.

SPH said the two properties are fully leased and expected to provide a steady income stream.

'The group's property portfolio was further enhanced with the award of the tender of the Sengkang commercial site,' it added.

SPH won a 99-year leasehold commercial site in Sengkang with its joint venture partner United Engineers in January, with a bid of $328 million.

Operating revenue from SPH's other units grew 12.9 per cent to $15.9 million, mainly from its Internet business.

SPH's share of net profits of associates and jointly controlled entities was $2.4 million, a reversal from the $216,000 loss in the second quarter of last year.

This included profits from MediaCorp Press, MediaCorp TV Holdings and OpenNet, and losses from its other media investments, SPH said.

SPH has a 40 per cent stake in MediaCorp Press and a 20 per cent stake in MediaCorp TV Holdings.

Costs arising from newspaper subscription drives and Clementi Mall operations brought other operating expenses up by 6.3 per cent to $57.9 million.

Materials, consumables and broadcasting costs rose a marginal 0.2 per cent to $38.5 million.

Investment income of $4.4 million was 57.4 per cent lower than in the second quarter of 2011 due to a reversal of provision for loss on derivative financial instruments last year.

Chief executive Alan Chan said in a statement: 'The group's print advertisement revenue will continue to move in tandem with the performance of the Singapore domestic economy.

'Amid the uncertain economic outlook, the group will continue to seek business opportunities for future growth while striving to sustain its core newspaper business.'

Earnings per share for the quarter was five cents, unchanged from the same period a year ago, while net asset value per share was $1.34 as at Feb 29, down from $1.39 as at Aug 31.

It proposed an interim cash dividend of seven cents per share, payable on May 23. The books closure date is May 10.

SPH shares closed flat at $3.89 yesterday.

melissat@sph.com.sg

[brattzz]

7 cts, in line with market expectations.

Note that SPH has stated that sub-urban mall rentals is one of their main long term income generator.

Hope SPH will buy-over Jurong Point soon!

SPH = Singapore Properties Holdings!

[KopiKat]

If not for rental income, SPH's profit would have been flat. How will they grow revenues in their core business? 7 cents/share interim, same as last year. (Not Vested)

Extracted from the news article,

'Amid the uncertain economic outlook, the group will continue to seek business opportunities for future growth while striving to sustain its core newspaper business.'

The meaning of sustain from dictionary,

1. To keep in existence; maintain.

So, you see, SPH mgmt is aware of the problem which many of you had so kindly pointed out in this thread ie. Newspapers are a dying biz. They're for sure not foolish enough to think this is a growth biz.

Still, the Newspaper biz continues to be the Cash Cow. While they continue to put in initiatives to 'sustain' this core biz, the 'cash' from this 'cow' is being used for new 'business opportunities for future growth'. Some of you may read it as buying over other biz related to their core biz like Magazines, Online Portals eg. ShareInvestor,.. BUT, this is only small money. The bigger money is being used, abeit overly agressively (many call it foolishly) to acquire Mall assets (Clementi Mall, Fernvale site). This will be where all future growth is going to come from. Perhaps in the distant future, SPH will stand for Singapore Property Hldgs or once they have the critical mass, spin out SPH Mall REIT!

Hope SPH will buy-over Jurong Point soon!

You must be vested in Guthrie or Lee Kim Tah or both to say that! SPH buying over JP means they'll likely end up with very huge debts as Cash level is not as large as before (buying and constructing malls need $$, u know). End up, they may not make much $$.

For me, a better idea would be to tie up with them to inject all their malls into a REIT. Higher chance for them to also make $$.

[Musicwhiz]

The bigger money is being used, abeit overly agressively (many call it foolishly) to acquire Mall assets (Clementi Mall, Fernvale site). This will be where all future growth is going to come from. Perhaps in the distant future, SPH will stand for Singapore Property Hldgs or once they have the critical mass, spin out SPH Mall REIT!

Haha, as well as that may be, it would take years to see how their property forays turn out. My view is that should they use the "idle" cash to acquire property aseets at this time, they are actually purchasing at the high point of the property cycle. The subsequent downturn in property (when it comes, not "if") would very likely mean a drastic revaluation of their property values and a possible rental reversion on the downside.

Would SPH shareholders be happy about them doing that? After all, SPH is starting to depart from their "core" business of advertising and printing/publishing.

[yaosheng]

i don't see the attraction of SPH for shareholders. like what forumers are saying, they are basically using print business as a cash cow to fund property development ventures. However, they keep the developed property for rental income instead of offloading it to avoid lumpy profit.

but if i want a suburban landlord, i might as well buy into CMT or FCT? yields and debt levels are roughly comparable.

[KopiKat]

The bigger money is being used, abeit overly agressively (many call it foolishly) to acquire Mall assets (Clementi Mall, Fernvale site). This will be where all future growth is going to come from. Perhaps in the distant future, SPH will stand for Singapore Property Hldgs or once they have the critical mass, spin out SPH Mall REIT!

Haha, as well as that may be, it would take years to see how their property forays turn out. My view is that should they use the "idle" cash to acquire property aseets at this time, they are actually purchasing at the high point of the property cycle. The subsequent downturn in property (when it comes, not "if") would very likely mean a drastic revaluation of their property values and a possible rental reversion on the downside.

Property assets have many different types. In Singapore, I'd classify suburban Malls (near MRT/LRT of a big enough size and located around a big enough critical mass of the populace) as one of the more defensive class (after Hospital assets). Ask yourself, during the last 10 years (long enough to see a few severe financial crisis), have you ever gone to any suburban mall and seen shops that are shuttered ie. no tenant? During AFC, I ever went to inquire about renting a unit in a mall (suburban / Town Area). The typical waiting queue is 1-2 years and they are very selective of who they'd allow as their tenant (that's why you see many malls having the same tenants as these are financially stronger). So, ya, if a recession comes along, we'll see huge drop in valuations / rental reversion for Property asets such as Residential, Industrial, Office but a smaller drop for Malls, Hospitals.

As for the impact of their property foray, refer to the article,

"Rental income leapt 21.6 per cent to $48 million. Rent from Clementi Mall, which officially opened early last year, totalled $9.2 million while Paragon's contribution rose 1.7 per cent, or about $700,000, on the back of higher rates."

That's the contribution from Clementi Mall. I think it took them ~3 years. Their latest one will be Fernvale and it'll likely take them ~4 years as they have to build from scratch ie. vacant plot of land. Is that a long time? Hey! You are a value investor, 3-4 years is not very long, right??

Would SPH shareholders be happy about them doing that? After all, SPH is starting to depart from their "core" business of advertising and printing/publishing.

I don't speak for all SPH shareholders. But, after their initial long learning curve from their foray into the Property biz during Paragon (+ subsequent acquisition and merging with Promenade), I'm happy to continue as a long term shareholder (will still do some short term trades now and then but will always die-die have a core holding) as long as their earnings and dividends remains stable and predictable.

but if i want a suburban landlord, i might as well buy into CMT or FCT? yields and debt levels are roughly comparable.

I also have REITs but they keep me constantly in a state of high alert and anxiety as I don't like to be surprised by any sudden Equity Rights Issues where either I have to cough up extra cash or see my DPU get diluted, especially in times of severe financial crisis.

In comparison, SPH had never required me to come up with extra cash. Instead, they ever did a Capital Reduction exercise many donkey years back and returned some cash (cancelled some shares tho').

[Musicwhiz]

That's the contribution from Clementi Mall. I think it took them ~3 years. Their latest one will be Fernvale and it'll likely take them ~4 years as they have to build from scratch ie. vacant plot of land. Is that a long time? Hey! You are a value investor, 3-4 years is not very long, right??

I don't speak for all SPH shareholders. But, after their initial long learning curve from their foray into the Property biz during Paragon (+ subsequent acquisition and merging with Promenade), I'm happy to continue as a long term shareholder (will still do some short term trades now and then but will always die-die have a core holding) as long as their earnings and dividends remains stable and predictable.

Hi KopiKat,

Of course 3-4 years is not considered a long time, as that would be the normal passage of time for a business to grow and for value to be realized gradually in the share price.

But what I am talking about here is a structural shift away from SPH's core business, meaning their efforts to "diversify" out of their core business which has almost slow to no growth prospects.

I checked SPH's BS as at Feb 29, 2012; and debt stood at $1b, while cash was $244m. Finance costs dipped quite a bit due to the repayment of some LT debt of about $100m, but debt levels are still fairly high and gross debt/equity stands at about 50%. Assuming they were to continue their property developments, they would need more funds and therefore, I foresee that they would either gear up more (i.e. higher finance costs) or pay out less dividends (as FCF would be channelled for such developments). Either way, it is going to increase their costs and stifle their cash flows.

It's hard to predict how property will do in 3-4 years time, as it is very dependent on Government policies and is, in a sense, a controlled market. Just my views.