SPH – OCBC

Headwinds for print continue

  • 1QFY15 broadly within expectations
  • Seletar Mall officially opened
  • Lower fair value to S$3.85

1QFY15 results within expectations

Singapore Press Holdings’ 1QFY15 PATMI came in at S$69.4m, down 21.9% YoY, mostly due to reduced contributions from the core Newspaper and Magazine business whose performance was affected by continued headwinds in the print advertising market. That said, this was broadly within our expectations and 1QFY15 PATMI and total revenues now constitute 25.9% and 25.1% of our full year forecast, respectively. In terms of the topline, we saw 1QFY15 total revenues dip 6.5% YoY to S$310.6m, mainly as contributions from the Newspaper and Magazine segment fell S$20.2m. Advertisement and circulation components were down by S$16.0m and S$3.2m YoY, respectively. In addition, revenue from the group’s other businesses also dipped S$1.8m YoY due to the absence of contributions from key shows this year.

Ad segment continues downtrend

Over 1QFY15, the performance of the core print segment remained uninspiring as display and classified revenue fell 8.3% and 9.5%, respectively. Staff costs were kept mostly flat at S$92.8m, up 1.7% YoY, while the average headcount was also stagnant at 4,310 as at end Nov 14 (versus 4,322 a year ago). Newsprint prices continued to inch down to S$586/MT versus S$598/MT in 4QFY14, while average monthly consumption also fell to 7,847 MT.

Seletar Mall now fully leased

We saw a set of stable results from the group’s property segment. 1QFY15 property revenue increased 1.2% YoY to S$51.4m while Net Property Income also grew 1.8% to S$37.0m. The group’s new Seletar Mall officially opened in 28 Nov 2014 and is now fully leased. We value SPH using a sum-ofthe-parts methodology, and lower our PE multiple for the group’s print segment from 9x to 7.5x, to reflect weakening fundamentals in the sector. Our fair value estimate dips to S$3.85, from S$4.13 previously. Maintain HOLD.

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