SPH – DBSV

Potential dividend upside in 4Q

At a Glance

• 3Q results expectedly strong; EBIT +36% yoy to S$186.5m

• Print ad revenue showed a stronger growth of 28% yoy to S$204.3m vs 2Q’s growth of 13.4%

• Sky@Eleven received TOP in May’10; earnings slack hereon is expected

• Looking forward to higher-than-expected dividends in 4Q (DBSV estimate 20 Scts); retain Buy and sum-of-parts TP: S$4.42

Comment on Results

Strong 3Q. Revenue grew 27% to S$415m in 3Q, largely contributed by newspaper & magazine operations (+20% yoy), rental revenue (+14%) and final recognition of Sky@Eleven (Sky11) development property (S$101m, +57%).

EBIT grew by a strong 36% to S$186.5m largely arising from lower newsprint charge-out costs (US$529/mt vs US$779/mt in 3Q09), offset partially by higher staff costs (+36% yoy) arising from higher bonus provisions from improved operating results. Newsprint charge-out is expected to be below US$550/mt in FY10F and the Group has locked in its print requirements till Mar’11.

Ad revenues jumped 28% in tandem with the strong economic growth. Print ad revenues jumped 28% yoy, higher than 13.4% growth we saw in 2Q. In 3Q, display, classifieds and magazines registered growths of 31%, 24% and 26% yoy respectively. YTD, print ad revenues grew 11.8%.

Sky11 TOP; look for higher dividends with cash inflow? Sky11 has received its temporary occupation permit (TOP) in May’10 with S$674m revenue and S$480m profit. The earnings slack as profit recognition ceases is largely expected. We remain optimistic of potentially higher special dividends when the remaining 80% cash proceeds are eventually received (S$539m).

Recommendation

Maintain Buy, TP: S$4.42. We maintain our Buy call for the counter as a proxy to the economy, coupled with a potentially higher than expected final/special dividends. Our sum-of-parts TP remains at S$4.42.

SPH – DBSV

Potential dividend upside in 4Q

At a Glance

• 3Q results expectedly strong; EBIT +36% yoy to S$186.5m

• Print ad revenue showed a stronger growth of 28% yoy to S$204.3m vs 2Q’s growth of 13.4%

• Sky@Eleven received TOP in May’10; earnings slack hereon is expected

• Looking forward to higher-than-expected dividends in 4Q (DBSV estimate 20 Scts); retain Buy and sum-of-parts TP: S$4.42

Comment on Results

Strong 3Q. Revenue grew 27% to S$415m in 3Q, largely contributed by newspaper & magazine operations (+20% yoy), rental revenue (+14%) and final recognition of Sky@Eleven (Sky11) development property (S$101m, +57%).

EBIT grew by a strong 36% to S$186.5m largely arising from lower newsprint charge-out costs (US$529/mt vs US$779/mt in 3Q09), offset partially by higher staff costs (+36% yoy) arising from higher bonus provisions from improved operating results. Newsprint charge-out is expected to be below US$550/mt in FY10F and the Group has locked in its print requirements till Mar’11.

Ad revenues jumped 28% in tandem with the strong economic growth. Print ad revenues jumped 28% yoy, higher than 13.4% growth we saw in 2Q. In 3Q, display, classifieds and magazines registered growths of 31%, 24% and 26% yoy respectively. YTD, print ad revenues grew 11.8%.

Sky11 TOP; look for higher dividends with cash inflow? Sky11 has received its temporary occupation permit (TOP) in May’10 with S$674m revenue and S$480m profit. The earnings slack as profit recognition ceases is largely expected. We remain optimistic of potentially higher special dividends when the remaining 80% cash proceeds are eventually received (S$539m).

Recommendation

Maintain Buy, TP: S$4.42. We maintain our Buy call for the counter as a proxy to the economy, coupled with a potentially higher than expected final/special dividends. Our sum-of-parts TP remains at S$4.42.

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