SINGAPORE (April 13): UOB Kay Hian continues to rate Singapore Press Holdings (SPH) at “sell” with an unchanged fair value estimate of $3.29, following the release of the group’s 2Q17 results.
To recap, the media organisation with businesses in print, Internet, new media and property on Wednesday posted a 1.2% fall in earnings for the quarter to $53.5 million, together with a lower interim dividend of 6 cents from 7 cents previously.
(See also: SPH reports 1.2% fall in 2Q earnings to $53.5 mil)
In a Thursday release, analysts Foo Zhi Wei and Andrew Chow interpret the dividend cut as a hint at possible cashflow strains.
Noting a sharper-than-expected decline in advertising revenue in the group’s latest set of financial results, which dragged its media segment down y-o-y, the research house has lowered its earnings forecasts by 2-6% with revised core earnings for FY17 down by 1.9% to $246 million.
Estimates have also been brought down by 5.2% and 6% to $234 million and $232 million for FY18 and FY19 respectively, as Foo and Chow expect the group’s key media segment to remain weak to reflect a lacklustre Singapore economy.
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“Diversification into other business segments has not yet been able to supplant earnings from SPH’s traditional media business, and is not expected to happen in the near term,” say the analysts.
“We think the [FY17] dividend payout is likely to range between 16-17 cents, depending on earnings performance in 2HFY17. We have however, reduced our assumption to 16 cents, as we expect further earnings weakness. Should an unexpected turnaround occur in 2HFY17, dividend payout would be 17 cents at best,” they add.
On the property front, Foo and Chow believe SPH’s divestment of Seletar Mall “does not seem imminent” as income has yet to stabilise – as according to them, SPH “prefers not to have to provide income support when injecting into SPH REIT”.
As at 12:26pm, shares of SPH are trading 1.14% lower at $3.47.
