SPH – Lim and Tan
• We maintain that SPH should best be seen as a semi-bond with an attractive yield.
• SPH has restored the special dividend to 11 cents per share, that was last paid in respect of ye Aug, and which was cut to 9 cents. With unchanged final of 9 cents and interim of 7 cents, the total of 27 cents translates to a 6.4% yield.
• We are confident this can be maintained, even though development profit from Sky @ Eleven has been fully booked in by Q3 ended May ’10, when the TOP was obtained; hence the Q4 profit of $75.28 mln vs $135.10 mln a year ago.
• Key point to note is that advertising sales, SPH’s core business, have been strong, in tandem with the economic growth. Q4’s sales increased 17% y-o-y to $181 mln, bringing the total for the fiscal year to $733.1 mln, 13% up from $648.3 mln a year ago.
• Rentals from Paragon are also on a steady uptrend, up 9% to $133.8 mln in the latest period.
• Note also depreciation (contributing to cash flow) amounted to $69.0 mln in FY09/10.
• Investible funds now stand at about $1.5 bln (38.2% in bonds, an out-performer this year; 22.6% in equities), while borrowings surged to $1.43 bln reflecting the 60% stake in Clementi Mall.
• SPH continues to merit a BUY.