Singapore Press Holdings (SPH)

[CityFarmer]

What about 17cts dividend to be paid on 21 DEC. 2012? SPH's current market price would have gone down below $4.0 if not in anticipation of this current dividend. Going forward is indeed tricky. i think for most of the stocks are the same? Who can be sure what's going to happen next?

Yield stocks like SPH (little or no growth) which pays rather predictable and regular dividends usually behaves like Bonds during cd/xd times. Some analysts even call them semi-Bonds...

The risk is that they may suddenly cut their payout rate and share price may react adversely eg. SBSTransit cut their payout from 100% to 50% in FY08. Was still trading at $3+ in end-07 but after rate cut + drop in EPS,.... now less than half price!

The possibility of SPH cutting their payout rate like SBS Transit is not comparable. Maybe SMRT is. But your logic of SPH behaves like a BOND is maybe comparable.

Why not? Why do you think one component is designated as Special Dividend? Easier for them to stop paying that component if they ever need to retain the cash for other purposes. Same thing for both SBSTransit and ComfortDelgro when they reduced their payout from 100% to 50% in FY08 ie. stop paying the Special component.

Note that I'm not referring to reducing DPS due to worsening EPS. I'm referring to the % of EPS being paid as DPS.

I will not rule out the possibility of SPH removing their special dividend, but the odd is slim, at least in near future IMO

In term of cash flow, the OCF is at surplus after dividend paid. OCF after dividend is $71 mils (FY2012) and $112 mils (FY2011).

On top of that, retained profit is another cushion on momentary impact on earning.

The most important is the commitment of management on the dividend payout.

[KopiKat]

The most important is the commitment of management on the dividend payout.

As pointed out by Lim and Tan report yesterday,

This would have been a greater plus if the board had committed to a clearer dividend policy, of say a minimum or a certain percentage of recurring earnings, even if it were to mean a lower yield.

So, still a risk to me... One I'm choosing not to ignore, even tho' the possibility is very low...

[Ben]

I personally believe that SPH would like to keep a high payout for as long as possible, at least if the current BODs are still in office. I remembered that when they bought Clementi Mall and paid a much higher price than the next highest bidder, they did mentioned no change to near future dividends payment. They also mentioned that all these diversification strategy is so that SPH can continue to maintain a high dividends payout in the future. This goes to show the management and BOD commitment to maintain the dividend for as long as possible.

Of course, in the long term anything can happen. But if SPH reduce dividend payment for business expansion, then it may not be a bad thing. Most important to me is that they must be able to maintain or improve their EPS.

[CityFarmer]

The most important is the commitment of management on the dividend payout.

As pointed out by Lim and Tan report yesterday,

This would have been a greater plus if the board had committed to a clearer dividend policy, of say a minimum or a certain percentage of recurring earnings, even if it were to mean a lower yield.

So, still a risk to me... One I'm choosing not to ignore, even tho' the possibility is very low...

Yes, should not be ignored, and should not be bothered too much either

Keeping a close watch should always be done.

[Temperament]

I personally believe that SPH would like to keep a high payout for as long as possible, at least if the current BODs are still in office. I remembered that when they bought Clementi Mall and paid a much higher price than the next highest bidder, they did mentioned no change to near future dividends payment. They also mentioned that all these diversification strategy is so that SPH can continue to maintain a high dividends payout in the future. This goes to show the management and BOD commitment to maintain the dividend for as long as possible.

Of course, in the long term anything can happen. But if SPH reduce dividend payment for business expansion, then it may not be a bad thing. Most important to me is that they must be able to maintain or improve their EPS.

"But if SPH reduce dividend payment for business expansion, then it may not be a bad thing. Most important to me is that they must be able to maintain or improve their EPS."

Unquote:

Yes agree!
To me, even if special dividend is cut for a year or two is alright if the diversifcation business is accretive. But how to assess that it is accretive diversification and not money down the drain diworsification? Have to watch very closely in order not to get caught.

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SPH is not comparable to SBSTransit and ComfortDelgro in the sense that they are not in the same sector of business. Therefore their operational requirements, mangement.....etc.etc.... are not the same.
But of course SPH's management may cut down or even cut off Special DIV. one day due to "diworsification" of their businesses.
So far, SPH has diversified more & more into landlord/tenants business. Which the market still can accept. Have to watch out closely what SPH going to diversify next. Hopefully SPH will not do a "diworsification" due to desperation to shore up earnings (ROE) to pay the special dividends.
If it happens one day, i hope i can get out in time.

You're talking about DPS being reduced due to EPS being reduced if they diworseify.

I'm talking about DPS being reduced even tho' EPS is the same. In the case of SBSTransit, they reduced it for CAPEX ie. Bus / MRT fleets renewal / expansion. As for ComfortDelgro, it's for acquisitions.

I'm not saying that for SPH, this will happen, but there's always such a possibility... ie. the risk I see for SPH for MYSELF. Printing presses need to be changed? How often? How much? Will they reduce the Payout Rate and keep the cash for such CAPEX? Or they suddenly buy more Malls and need more cash? Or, they decide to make an unsolicited offer for F&N's Publishing biz and need cash? The above assumes they have reached an optimal debt level... Possible? Is it your risk?

I think not long ago, SPH has replaced or upgraded their presses. But special dividend was not cut or reduced much due to their retained cash surplus, i supposed. (i am too lazy to dig up the facts.) As far as i remember SPH has tried their best to maintain their special dividends. If they have not gone into REIT's business, i think our special dividends will have flown out of the windows and gone "forever" already.
Another words, have to watch carefully what Management is doing with diversification to maintain special dividends. That is my sense of risks now.

---

What about 17cts dividend to be paid on 21 DEC. 2012? SPH's current market price would have gone down below $4.0 if not in anticipation of this current dividend. Going forward is indeed tricky. i think for most of the stocks are the same? Who can be sure what's going to happen next?

Yield stocks like SPH (little or no growth) which pays rather predictable and regular dividends usually behaves like Bonds during cd/xd times. Some analysts even call them semi-Bonds...

The risk is that they may suddenly cut their payout rate and share price may react adversely eg. SBSTransit cut their payout from 100% to 50% in FY08. Was still trading at $3+ in end-07 but after rate cut + drop in EPS,.... now less than half price!

The possibility of SPH cutting their payout rate like SBS Transit is not comparable. Maybe SMRT is. But your logic of SPH behaves like a BOND is maybe comparable.

Why not? Why do you think one component is designated as Special Dividend? Easier for them to stop paying that component if they ever need to retain the cash for other purposes. Same thing for both SBSTransit and ComfortDelgro when they reduced their payout from 100% to 50% in FY08 ie. stop paying the Special component.

Note that I'm not referring to reducing DPS due to worsening EPS. I'm referring to the % of EPS being paid as DPS.

I will not rule out the possibility of SPH removing their special dividend, but the odd is slim, at least in near future IMO

In term of cash flow, the OCF is at surplus after dividend paid. OCF after dividend is $71 mils (FY2012) and $112 mils (FY2011).

On top of that, retained profit is another cushion on momentary impact on earning.

The most important is the commitment of management on the dividend payout.

Retained Profit:
Extract
"A company's board of directors may appropriate some or all of the company's retained earnings when it wants to restrict dividend distributions to shareholders. Appropriations are usually done at the board's discretion, although bondholders and other circumstances may contractually require the board to do so. Appropriations appear as a special account in the retained earnings section. When an appropriation is no longer needed, it is transferred back to retained earnings. Because retained earnings are not cash, a company may fund appropriations by setting aside cash or marketable securities for the projects indicated in the appropriation."

Q:
Since Retained Profit/Earnings is not cash, how useful or in what way does it helps when a company needs cash for operation?
Anyone cares to share?
Thanks.

[CityFarmer]

SPH distributed their AR. The AR is different from previous year, paper quality is softer and easier to read.

I like the change, likely initiated by new chairman, Dr Lee Boon Yang.

[Temperament]

Nothing exciting about AR. Everything being equal, i am willing to sell @ > 52 wk high and willing to buy @ < 4.0 to get the 17 cents dividend.

[CityFarmer]

Nothing exciting about AR. Everything being equal, i am willing to sell @ > 52 wk high and willing to buy @ < 4.0 to get the 17 cents dividend.

I have done another cycle of fund switching from SPH to others. I am still holding a stake on SPH. I will come back once switching-in opportunity arises.

[violinist]

1 week before XD, BB scoops up liao.

[Temperament]

1 week before XD, BB scoops up liao.

Sorry! i am a nerd. may i know what's BB?