Singapore Press Holdings (SPH)

[karlmarx]

Thank you for the reading list, karlmarx. Is nice to know more non-US centric books. I found 1, 2, 6 on the national library's epub collection. Its a start!

You're welcome. Don't forget to always question what you're reading; we learn better that way. Enjoy!

[cyclone]

Proposed Acquisition of Interest in KBS US Prime Property Management Pte. Ltd. and Prime US REIT

Singapore Press Holdings Limited ("SPH") announced that Times Properties Private Limited, a wholly-owned subsidiary of SPH ("TPPL"), had today entered into:
(i) a call option agreement with KBS Asia Partners Pte. Ltd. ("KAP"), pursuant to which KAP has granted to TPPL a call option for TPPL to acquire a 20 per cent. interest in KBS US Prime Property Management Pte. Ltd. ("Prime US REIT Manager") for a consideration of USD14,600,000 (subject to adjustments) (such call option, the “Call Option”). The Call Option is exercisable by TPPL during the period commencing on the date that the Monetary Authority of Singapore ("MAS") approves of the application for TPPL to be a substantial shareholder of the Prime US REIT Manager in accordance with the Guidelines on Fit and Proper Criteria issued by the MAS (such date, the "MAS Approval Date"), and ending on the date falling three months after the MAS Approval Date;
and
(ii) a subscription agreement with the Prime US REIT Manager to subscribe for units in Prime US REIT, such that TPPL would hold 6.765 per cent. of the units in Prime US REIT (the "TPPL Units") immediately following the completion of the initial public offering of Prime US REIT. The consideration payable for the TPPL Units is USD55,000,000 and shall be paid in cash.

More details in https://links.sgx.com/FileOpen/SPH%20Ann...eID=565324

[weijian]

Thank you for the reading list, karlmarx. Is nice to know more non-US centric books. I found 1, 2, 6 on the national library's epub collection. Its a start!

You're welcome. Don't forget to always question what you're reading; we learn better that way. Enjoy!

hi karlmarx,
Thanks for the list. Read about Liem after getting an introduction on the Godfathers from Joe Studwell. It was some time back and would be great for me to know more about new godfathers in depth. Alas, so much reading to do but so little time!

https://www.amazon.com/Asian-Godfathers-...0802143911

[karlmarx]

hi karlmarx,
Thanks for the list. Read about Liem after getting an introduction on the Godfathers from Joe Studwell. It was some time back and would be great for me to know more about new godfathers in depth. Alas, so much reading to do but so little time!

https://www.amazon.com/Asian-Godfathers-...0802143911

I found Studwell's Godfathers to be a pretty informative and entertaining read. But because it tries to cover too many characters, there is, I would say, not much insight. I thought readers may benefit more by following up on the sources he used, found on the bibliography. 

Compared to Godfathers, the tome by Richard Borsuk and Nancy Chng is on a whole different league, mainly due to the amount of research performed (and permitted by the powers that be). Such kinds of work which illustrate the inter-dependence between power (Suharto) and business (Liem), over 500 pages, is extremely rare. Mainly because there is seldom financial rewards, and much physical danger, for the authors involved, in doing so. 

Book that are self-authored -- or written with the help of a ghost writer -- are mostly for purposes of self-aggrandizement, and hence, for those seeking useful insights, a waste of time. But these are what the bookstores usually stock. I wasted my money on Kuok's biography.

[karlmarx]

Media revenues continue to contract.

https://links.sgx.com/FileOpen/SPH%20Res...eID=570204

But, good news if you're a (prospective) customer. Digital subscription for BT is now $18/month, cheaper than before.

[AQ.]

reading thru the latest Q numbers, I think existing shareholders should be very concerned:

1. Compiling the numbers for the Media segment, 
    Yr     Revenue     Profits          Impairments                                                 Normalised Profit  Normalised margins
    18     656mio       92               22mio for online classified                              114mio                17%
    17     725mio       27               95mio for PPE, Magazines, online classified      122mio                 17%
    16     834mio       175             30mio for magazines                                      205mio                 25%
    15     902mio       241                                                                                241mio                 27%

The lastest 9M19 margins stand at 12% with revenues down 10% YOY. Full yr mdia profits prob lands ~70-80mio, going by extrapolations.

So not only are they selling less circulations, print ads and classified ads, they are getting ever lower margins i.e. cost pressures continue to persist.
And if they are making 80mio this yr, with profits dropping 20mio p.a. as they have been doing for the past 5 yrs, it might be possible for the media arm to be loss making within the next 5yrs, and it seems to be a matter of when and not if for the event to occur within the next decade.

But yet i do not sense a serious urgency for the ST etc to transform itself and make itself leaner with a product that people actually wants to spend $ and time to read. By and large the ST/BT seems to be the same old thing.
A smaller circulation begets a smaller network effect begetting less attractiveness as a platform to advertise which leads to less $ to produce content to attract circulation. The vicious cycle continues.

The likelihood of SPH becoming a property company with a loss-making media arm seems to be playing out ~2025.

2. Thus far the new management's strategy is to transform the balancesheet to make M&A into "defensive" sectors to augment the earnings drop. But the latest results show a serious issue - are the management savvy enough to do large M&As?

23mio of impairment was made on the aged care biz, which I suppose refers to Orange Valley, which was purchased for $164mio in Apr17 (i.e. 2.3x book of 71mio).
In AR17+18, the goodwill allocated was justified on discount rate of 8.5% and growth of 1.3%.
Yet 2yrs after the acq, business conditions have evidently deteriorated to justify a 14% impairment of the purchase price i.e. the new business could not even grow @ 1.3% for the past 2 yrs and perhaps forseeable future.
While it makes sense to purchase defensive biz in view of the shareholders profile (i.e. a lot of retirees), but overpaying for defensive business is equally disastrous.
NB: Still 120mio of goodwill on the balancesheet even after the OV impairment i.e. 7.5c/share of goodwill left

If this is an indication of things to come, how will the $600mio ptf of UK PBSAs turn out, esp after the 2yrs of rental guarantee?

[mkzhou88]

https://www.theonlinecitizen.com/2019/07...e-onboard/

"Perhaps his performance in NOL and SPH is appraised by how much he can lose for the company?"

interesting read.

[money]

https://www.theonlinecitizen.com/2019/07...e-onboard/

"Perhaps his performance in NOL and SPH is appraised by how much he can lose for the company?"

interesting read.

haha actually i think there is little anybody can do to reverse the decline of SPH's media business. Perhaps the best option is to sell the media business but it becomes political in nature and is unlikely to happen. THe best shareholders can really do is to focus on its property business, and more importantly, not overpay for the property segment. Media is not worthless but it is certainly worth far less than in the past.

[karlmarx]

In most countries, the people in power and the people in business are separate. 

Singapore is quite unique because most of those in power are also in business. I am referring to the many businesses owned by the state, which, unlike your regular family-owned business, are led and managed by salary men/women with no ownership of the business. 

While this arrangement has produced stable growth and more or less satisfactory results for the company/employees/country, it is also the reason why these GLCs do not become 'superstars' and/or 'innovation leaders.' Even though the salary men/women of SIA have missed the opportunity to do what AirAsia has done, it should be agreed that these people -- who are not of any business/tycoon heritage -- has done as well as one could reasonably expect them to. The good thing about such an arrangement is less wastage/corruption, which could have a far deeper negative impact on the development of a country.

But to expect such salary men/women to lead and manage GLCs, will require no less than the 'best' human resources, identified and given responsibilities as young as possible, so as to hasten their learning, and then maximise their useful life. To attract the best people, you have to offer the most attractive incentive. If I were to sign my life away to 'The Man,' through, say, an overseas military scholarship, I must know that I will be well taken care of, for the rest of my life. Especially if I am bright and have plenty of better, competing offers.

It is interesting that the retired general here has been posted to companies (NOL & SPH) which most will agree, are/were struggling very hard. It is not likely that the Board of these two companies truly believe that he will be able make a significant improvement to the businesses. Why then is he put there?

The retired general here is simply doing his job, because, well someone has to. Some may see that he is having it good, because of the comparison between his salary and relative performance. My opinion is more nuanced. Have you been in a job, doing something over an extended period of time, and the result of which you think/believe is ultimately futile? There are a lot of people in such frustrating situations, across all income levels. But they do it still. 

Maybe NYC does it for the money. Maybe he does it because he really thinks he can turn it around. Or maybe he has little choice in what he can do. I don't know. But Straits Times' raison d'etre is nation building. And so SPH's management will be mindful of any initiatives to improve business, especially if they may damage its core interest. The powers that be probably do not expect SPH's media business to turn around.

Singapore's system of salary men/women running GLCs is only possible if there are retired generals like NYC running SPH. If I am a bright young kid contemplating an overseas military scholarship, I will look at Ng, and probably say, "Hey, once I'm done with my military career, I still have a shot at running a huge corporate." That's a lot more than what any kid in the street can hope for in life.

By the way, I think this should be in the SPH thread. For a moment, I thought NYC has been brought over to QAF.

[specuvestor]

just sidetrack a bit: I think it's the other way round that most business and politics are intertwined in the capitalistic centric world. US is supposedly a good reference.

It is enlightened policies that tries to separate them. I'm not sure if they can be separated totally but a robust structure and system should at least balance the conflict of interests

In most countries, the people in power and the people in business are separate. 

Singapore is quite unique because most of those in power are also in business. I am referring to the many businesses owned by the state, which, unlike your regular family-owned business, are led and managed by salary men/women with no ownership of the business.