SINGAPORE (July 12): DBS Vickers Securities is maintaining its “hold” call on Singapore Press Holdings (SPH) with a lower target price of $2.58 compared to $2.60 previously, after lowering FY19-20F earnings by 21-35% on slower residential property sales from the group’s Bidadari development, The Woodleigh Residences.
This comes after recent news of property cooling measures, which has led DBS to believe property sales and recognition The Woodleigh Residences will now be backend-loaded towards FY21 on the back of cooling demand.
Further, the research house notes that SPH’s latest set of 3Q18 results indicated higher-than-expected costs the media segment due to the continued decline of advertising revenue. Based on the cautious GDP growth outlook as of late due to ongoing trade tensions between the US and China, Singapore’s two largest export markets, it also expects ad spend to be muted going forward.
In a Wednesday report, analyst Alfie Yeo says his adjusted FY20F earnings projections are below consensus after recognising slower-than-expected residential sales for SPH’s Bidadari property project going forward, following the recent adjustment in Additional Buyer’s Stamp Duty (ABSD) and Loan-to-Value limits (LTV).
Nonetheless, he believes The Seletar Mall will be injected into SPH REIT eventually, which should offer relief and support to SPH’s share price and dividend per share (DPS), in his view.
“We value SPH's core newspaper and magazine operations at 58 cents per share based on discounted cash flow model, SPH’s property business at $1.63, and net cash and investments at 37 cents,” says Yeo of the revised target price, which is based on sum-of-parts valuation.
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“A strong economic recovery and pick-up in consumption will lead to adex improvement, which is a key risk to our view. Sale of its investments, such as M1 or spin-off of The Seletar Mall could also lead to higher special DPS expectations,” he adds.
As at 10.06am, shares in SPH are trading 2 cents higher at $2.77, or 1.3 times FY19F book.
