SPH – OCBC

Circulation and ad revenues continue weak trend

  • 1QFY13 results mostly in line
  • Falling circulation and ads
  • Retail malls healthy

1QFY13 PATMI of S$91m

Singapore Press Holdings (SPH) reported 1QFY13 PATMI of S$91.1m which was 6.6% lower YoY mostly due to a reduced contribution from the Newspaper and Magazine and the exhibitions business. 1QFY13 PATMI now forms 24.3% of our annual forecast and is broadly in line with expectations. Topline for the quarter came in at S$322.1m which was 3.1% lower again mostly due to a weaker performance from the Newspaper and Magazines and the exhibitions segments. Of note, circulation revenues declined by S$1.3m (down 2.6%) to S$49.0m during the quarter, while rental income for the group increased by S$1.3m (up 2.9%) to S$48.2 due to higher rental rates achieved at the Paragon.

Trend of weak print advertisement performance continues

We saw the trend of weak print advertisement performance continue in 1QFY13 with revenue declining 4.1% mainly due to classified ads falling 10.5%, while display ads also dipped (down 1.1%). On the cost side, however, things looked more positive: staff costs were mostly flat at S$89.0m (up 0.8%) with average headcount rising marginally to 4,258 (up 0.9%) from 4,221. Material, production and distribution costs fell by S$2.3m (down 4.1%), driven mostly by lower newsprint costs which was $2.0m lower (down 7.6%).

Maintain HOLD

We believe that the persistent trend of falling circulation and advertisement revenues point to increasing uncertainties in SPH’s core newspapers and magazines business, and would put pressure on SPH’s overall operating margins over the mid to long term. However, this is buttressed by its growing retail mall business, which continues to perform well. Moreover, an attractive dividend yield at 5.8% at this juncture likely points to limited price downside from here. Maintain HOLD with an unchanged fair value estimate of S$4.05. We would turn buyer around S$3.90 levels.

SPH – OCBC

Circulation and ad revenues continue weak trend

  • 1QFY13 results mostly in line
  • Falling circulation and ads
  • Retail malls healthy

1QFY13 PATMI of S$91m

Singapore Press Holdings (SPH) reported 1QFY13 PATMI of S$91.1m which was 6.6% lower YoY mostly due to a reduced contribution from the Newspaper and Magazine and the exhibitions business. 1QFY13 PATMI now forms 24.3% of our annual forecast and is broadly in line with expectations. Topline for the quarter came in at S$322.1m which was 3.1% lower again mostly due to a weaker performance from the Newspaper and Magazines and the exhibitions segments. Of note, circulation revenues declined by S$1.3m (down 2.6%) to S$49.0m during the quarter, while rental income for the group increased by S$1.3m (up 2.9%) to S$48.2 due to higher rental rates achieved at the Paragon.

Trend of weak print advertisement performance continues

We saw the trend of weak print advertisement performance continue in 1QFY13 with revenue declining 4.1% mainly due to classified ads falling 10.5%, while display ads also dipped (down 1.1%). On the cost side, however, things looked more positive: staff costs were mostly flat at S$89.0m (up 0.8%) with average headcount rising marginally to 4,258 (up 0.9%) from 4,221. Material, production and distribution costs fell by S$2.3m (down 4.1%), driven mostly by lower newsprint costs which was $2.0m lower (down 7.6%).

Maintain HOLD

We believe that the persistent trend of falling circulation and advertisement revenues point to increasing uncertainties in SPH’s core newspapers and magazines business, and would put pressure on SPH’s overall operating margins over the mid to long term. However, this is buttressed by its growing retail mall business, which continues to perform well. Moreover, an attractive dividend yield at 5.8% at this juncture likely points to limited price downside from here. Maintain HOLD with an unchanged fair value estimate of S$4.05. We would turn buyer around S$3.90 levels.

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