SPH – DBSV

No catalyst, but hold for yield

At a Glance

1Q within expectations; EBIT at S$126.8m dropped by -23% on absence of Sky11 contribution, else would have been up 11% yoy.

Ad revenues up by 13% yoy while rental surged 25% yoy on rental increase and higher lettable area, but offset by higher costs, namely staff and consumables.

Clementi Mall achieved 85% commitment, and Group expects full tenancy commitment in Apr’11.

Maintain Hold, sum-of-parts TP: S$4.37.

Comment on Results

1Q within expectations; Revenue and EBIT dropped respectively by 10% and 23% yoy to S$318.7m and S$126.8m respectively, on the absence of Sky@Eleven (Sky11) property development contribution, which was completed in May’10. Else, revenue and EBIT would have increased by 12% and 11%, respectively.

Higher revenues offset by costs. Ad revenues grew by 13.1% yoy to S$206.3m while rental surged 25% yoy to S$36.8m on the back of rents revision and higher lettable area from Paragon’s façade enhancement. Circulation revenue dipped by 2.1% on lower copies sold. Costs also crept up in tandem, largely driven by staff costs (+16% yoy to S$87m) due to partial restoration of pay, higher headcount and expiration of Jobs Credits (c.S$1/mth).

Clementi Mall opens with 85% tenancy committed. Clementi Mall has had its soft opening. Current tenancy commitment is at c.85%, and management expects full commitment when it officially opens in Apr 2011. The Group will continue to focus on its core business, and will be on the look out for retail properties.

Recommendation

Maintain Hold, TP: S$4.37. We expect ad revenues to grow at a slower pace, in line with the economy, after a rebound in FY10. This will be partially offset by higher staff and newsprint costs. We maintain our Hold recommendation, as we see no significant catalyst ahead, while share price should be supported by a decent yield of c.6%.

SPH – DBSV

No catalyst, but hold for yield

At a Glance

1Q within expectations; EBIT at S$126.8m dropped by -23% on absence of Sky11 contribution, else would have been up 11% yoy.

Ad revenues up by 13% yoy while rental surged 25% yoy on rental increase and higher lettable area, but offset by higher costs, namely staff and consumables.

Clementi Mall achieved 85% commitment, and Group expects full tenancy commitment in Apr’11.

Maintain Hold, sum-of-parts TP: S$4.37.

Comment on Results

1Q within expectations; Revenue and EBIT dropped respectively by 10% and 23% yoy to S$318.7m and S$126.8m respectively, on the absence of Sky@Eleven (Sky11) property development contribution, which was completed in May’10. Else, revenue and EBIT would have increased by 12% and 11%, respectively.

Higher revenues offset by costs. Ad revenues grew by 13.1% yoy to S$206.3m while rental surged 25% yoy to S$36.8m on the back of rents revision and higher lettable area from Paragon’s façade enhancement. Circulation revenue dipped by 2.1% on lower copies sold. Costs also crept up in tandem, largely driven by staff costs (+16% yoy to S$87m) due to partial restoration of pay, higher headcount and expiration of Jobs Credits (c.S$1/mth).

Clementi Mall opens with 85% tenancy committed. Clementi Mall has had its soft opening. Current tenancy commitment is at c.85%, and management expects full commitment when it officially opens in Apr 2011. The Group will continue to focus on its core business, and will be on the look out for retail properties.

Recommendation

Maintain Hold, TP: S$4.37. We expect ad revenues to grow at a slower pace, in line with the economy, after a rebound in FY10. This will be partially offset by higher staff and newsprint costs. We maintain our Hold recommendation, as we see no significant catalyst ahead, while share price should be supported by a decent yield of c.6%.

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