SINGAPORE (April 13): CIMB is maintaining its “hold” on Singapore Press Holdings with $3.36 saying the strategic review, transformation and rightsizing of its core media business remains ongoing.
(See also: SPH reports 1.2% fall in 2Q earnings to $53.5 mil)
SPH’s 2Q17 revenue came in at $238 million, in line with the seasonally weaker quarter. Net profit of $54 million was down 1% y-o-y but up 17% q-o-q, thanks to the absence of the $15.9 million one-off charge recorded in 1Q17 arising from restructuring of media business.
“Its 1HFY17 net profit of $99 million missed consensus but met our expectations at 44% of our full-year forecast,” says analyst Ngoh Yi Sin in a Thursday report.
2Q17 media revenue fell 12% y-o-y and 17% q-o-q due to declines in newspaper, classifieds and display ads. Circulation revenue fell 6% q-o-q but was stable on a y-o-y basis, as digital gained stronger traction relative to print newspapers.
“Management is looking to leverage on SPH’s brand equity and content to sell across various platforms and expand its audience reach, hence building a stronger proposition to advertisers and benefiting its events/conferences business,” says Ngoh.
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Meanwhile, the property segment revenue grew 2.5% q-o-q and 1.3% y-o-y in 2Q17, backed by positive rental reversion across all three malls, while PBT (ex-fair value gains) increased
10% q-o-q and 18% y-o-y.
Net income from investments of $16.8 million was also significantly higher y-o-y in 2Q17, driven by higher gains on disposal of investments from the media fund to partially offset the fair value losses on hedges for portfolio investments.
SPH declared a lower interim DPS of 6 cents in view of the challenging media business. This has led CIMB to trim its FY17F DPS to 17 cents.
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“But we maintain our view that any strategic sale of M1 stake and/or Seletar Mall could yield special dividends... Changes in Singapore’s economy could pose upside/downside risks to our call,” says Ngoh.
Shares of SPH are down 5 cents at $3.47.
