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Singapore Press Holdings: Near-term reprieve for ad spending
SPH’s 1QFY18 results were broadly within expectations. Operating revenue fell 7.0% YoY to S$258.8m, on the back of a 13.9% YoY drop in media revenue, accompanied by a 5.5% decrease in operating costs to S$199m. This quarter also saw a gain of S$5.9m being registered from the dilution of interest on Mindchamps’ IPO listing, as well investment income of S$12.4m comprising primarily divestment gains. All in, PATMI grew 32.1% YoY to S$60.4m. Disruption in the media business has been an ongoing theme, and 1QFY18 was no different. However, while newspaper ad revenue registered decreases across all 3 sub-segments (Display/Classified/Newspaper Ad) of between 12.5% and 17.9% YoY, we note that this negative variance has now narrowed on a YoY basis in comparison to the preceding quarters. We understand that this was on the back of improved retail ad spend, while the recent enbloc fever (and resultant property launches) should grant further respite moving forward. However, we prefer to remain cautious and await the unfolding of further initiatives to reposition the media business. Amongst our adjustments to our assumptions, we apply a 10% conglomerate discount, and revise our fair value downwards from S$2.93 to S$2.51.
We revise our fair value downwards from S$2.93 to S$2.51.
Singapore Press Holdings: Continued weakness in media segment
SPH reported a 7.0% YoY drop in operating revenue for 1QFY18 to S$258.8m, due primarily to continued weakness in the media segment. In particular, advertisement and circulation revenue dropped 16.7% and 7.3% YoY, respectively. The group’s property segment continued to show steady results, with revenue rising 1.2% YoY to S$61.2m on the back of higher rental income from the group’s retail assets. The group’s other businesses saw revenue growing 48.2% YoY to S$23.6m with contributions from the aged care business. A gain of S$5.9m was registered from the dilution of interest on an associate’s IPO listing. PATMI rose 32.1% YoY to S$60.4m, boosted also by investment income of S$12.4m, comprising mainly divestment gains.
We maintain our HOLD rating, but put our fair value estimate of S$2.93 under review.