SPH – DMG

No surprises; maintain NEUTRAL

2QFY12 recurring earnings grew 14% YoY, within our expectations. SPH reported 2QFY12 recurring earnings of S$90m (-26% QoQ) which made up 20% of our full year forecast. 2Q has historically been a weaker quarter. Property segment was the main contributor with rental income up 21% YoY on the back of higher contribution from Clementi Mall and higher rental rates from Paragon. Another comforting note was that 1HFY12 “Others” segment PBT losses were narrowed by 64% to S$5.6m. We continue to see a lack of catalysts for share price upside and maintain NEUTRAL with TP of S$3.91. An interim dividend of 7S¢ per share has been declared. SPH’s FY12 dividend yield of 6.2% still remains attractive.

Decline in N&M performance offset by property and others. 1HFY12 N&M PBT was down 6% due to lower ads from the banking and FMCG sectors. This was offset by better performance from the “Others” segment (comprising of internet and exhibitions) whose decline narrowed by 64% to S$5.6m. Property continued to contribute strongly as expected with 1HFY12 PBT growth of 43% to S$48m on the back of higher rental income from Clementi Mall (100% leased) and higher rental rates from Paragon.

Newsprint and staff costs remain stable. 1HFY12 staff costs increased only by a marginal 1% to S$178.3m despite a 4% increase in average headcount (from the acquisition of ACP Magazines) as bonus pools were reduced from the weaker performance in the N&M segment. Newsprint charge out prices remains stable as well with 2QFY12 prices flat QoQ (compared to previous seven quarters of consecutive increases).

SOTP-derived TP of S$3.91. We value the core media segment based on 11x FY12 P/E, Paragon (S$2.4b) with assumption of a 5% revaluation gain, Clementi Mall (S$266m) with assumption of average passing rent of S$15/sqft, cap rate of 5.5%, M1 and Starhub at DMG TP and investments as at Feb 12.

SPH – DMG

No surprises; maintain NEUTRAL

2QFY12 recurring earnings grew 14% YoY, within our expectations. SPH reported 2QFY12 recurring earnings of S$90m (-26% QoQ) which made up 20% of our full year forecast. 2Q has historically been a weaker quarter. Property segment was the main contributor with rental income up 21% YoY on the back of higher contribution from Clementi Mall and higher rental rates from Paragon. Another comforting note was that 1HFY12 “Others” segment PBT losses were narrowed by 64% to S$5.6m. We continue to see a lack of catalysts for share price upside and maintain NEUTRAL with TP of S$3.91. An interim dividend of 7S¢ per share has been declared. SPH’s FY12 dividend yield of 6.2% still remains attractive.

Decline in N&M performance offset by property and others. 1HFY12 N&M PBT was down 6% due to lower ads from the banking and FMCG sectors. This was offset by better performance from the “Others” segment (comprising of internet and exhibitions) whose decline narrowed by 64% to S$5.6m. Property continued to contribute strongly as expected with 1HFY12 PBT growth of 43% to S$48m on the back of higher rental income from Clementi Mall (100% leased) and higher rental rates from Paragon.

Newsprint and staff costs remain stable. 1HFY12 staff costs increased only by a marginal 1% to S$178.3m despite a 4% increase in average headcount (from the acquisition of ACP Magazines) as bonus pools were reduced from the weaker performance in the N&M segment. Newsprint charge out prices remains stable as well with 2QFY12 prices flat QoQ (compared to previous seven quarters of consecutive increases).

SOTP-derived TP of S$3.91. We value the core media segment based on 11x FY12 P/E, Paragon (S$2.4b) with assumption of a 5% revaluation gain, Clementi Mall (S$266m) with assumption of average passing rent of S$15/sqft, cap rate of 5.5%, M1 and Starhub at DMG TP and investments as at Feb 12.

Comments are Closed