Author: tfwee
SPH – BT
SPH Q3 profit dips 5% to $126.7m
MEDIA group Singapore Press Holdings (SPH) yesterday said net profit for the quarter to May 31 fell 5 per cent to $126.7 million from $133.4 million a year ago.
Revenue from its core newspaper and magazine division fell 17.4 per cent to $222 million from $268.9 million a year ago, as print ad sales fell 23.3 per cent to $159.5 million, led by the fall in recruitment and display advertisements. Earnings per share remained flat at eight cents.
However, SPH’s property division reported 40 per cent higher sales, or $94.4 million against $67.3 million.
SPH said staff costs fell 18.9 per cent as a result of pay cuts instituted in April and a decrease in bonuses, as well as a $3.4 million grant under the government’s Jobs Credit scheme.
Headcount rose slightly to 3,971 as at end-May, from 3,874 a year ago. Total operating expenses fell by $12.8 million or 6 per cent to $199.9 million.
For the first nine months of the year, net profit fell 16.9 per cent to $286.8 million from $344.9 million.
Sales were largely flat at $963.7 million but operating revenue from its newspapers and magazines was down almost 12 per cent to $675.9 million.
For the nine-month period, SPH lost $16.2 million on the value of its investments, due mainly to a $30.6 million loss in the value of its externally managed funds, which was offset by dividend and interest income.
SPH said performance of its investment portfolio will continue to be affected by financial market volatility and that it will continue to be conservative in allocating assets.
Of the roughly $900 million in its group investible fund, 44.4 per cent is in cash and deposits, with 28.7 per cent in equities and 14.2 per cent in bonds. Just under 13 per cent were placed in investment funds.
SPH said advertising revenue was expected to move in tandem with the performance of the economy.
Chief executive officer Alan Chan said: ‘Despite early signs that the decline in global demand is levelling out, the timing and extent of the economic recovery remain unclear. The threat of the Influenza A (H1N1) pandemic further clouds visibility on business conditions.’
SPH said that newsprint charge-out rates should remain high for the rest of the year with some moderation expected in FY 2010.
For the first nine months in FY 2009, newsprint costs jumped 18.7 per cent to $101.3 million from $85.3 million a year ago.
For its property segment – Paragon shopping mall along Orchard Road and the Sky@eleven residential project – ‘profits . . . are expected to contribute significantly to the group’s recurring earnings’, SPH said.
‘Paragon provides a stable, recurrent income stream (while) the group will continue to progressively recognise profit from Sky@eleven, which is on track to obtain (its Temporary Occupation Permit) in FY 2010.’
Mr Chan said: ‘As trading conditions are expected to remain uncertain, we will continue to be vigilant in managing our costs, growing our revenue and maintaining a strong balance sheet.’
StarHub – CNA
Terry Clontz to retire as StarHub’s CEO, Neil Montefiore to succeed him
Terry Clontz will retire as StarHub’s CEO in January 2010, and will be succeeded by telecommunications industry veteran Neil Montefiore. However, Mr Clontz will continue as a director with the group, said StarHub in a statement.
Mr Clontz, 58, joined StarHub in January 1999 as its founding president and CEO. He also serves as a director on StarHub’s Board.
Under his leadership, StarHub merged with Singapore Cable Vision (SCV) in 2002; brought it public on the Singapore Exchange in 2004; made StarHub Singapore’s second largest mobile operator in 2005; and grew its revenue base to more than S$2 billion by 2008.
StarHub said Mr Clontz has led StarHub from a fledgling new entrant in Singapore’s telco industry to a fully integrated quadruple-play listed entity this year.
Tan Guong Ching, chairman of StarHub said: “At StarHub, he is known for his innovative ideas, clear vision, and cohesive strategies. Terry has been instrumental in the success of StarHub, as well as in instilling in the company a culture dedicated to strong corporate governance, integrity, and compliance.”
Clontz said: “I have thoroughly enjoyed the opportunity of working with the StarHub team and living in Singapore for more than 10 years. Info-communications is an exciting industry, so I intend to remain somewhat active in the industry; but I look forward to spending more time with my family.”
StarHub said Mr Montefiore, 56, will join StarHub in January 2010, subject to regulatory approval. He brings with him over 33 years of experience in the telecommunication industry.
Mr Montefiore was the CEO and a board director of M1 in Singapore since 1 April 1996. Before that, he was the director of Mobile Services at Hong Kong Telecom CSL Limited, the largest cellular operator in Hong Kong.
On appointing the former M1 CEO, StarHub said it strongly believes that he is the most suitable candidate to lead the company to the next level. The telco said the key criteria in selecting the new CEO included strong leadership and experience with the telco business and regulatory environment in Singapore.
Mr Montefiore left M1 on February 1 this year after 13 years at the helm to pursue personal interests.
Mr Clontz added: “I am leaving StarHub in good hands. Neil and I have known each other on a professional and personal level for ten years. I have enormous respect for Neil and I am confident that I will be turning the helm of StarHub over to a seasoned industry executive who can continue steering the company successfully.”
SPH – CIMB
Recovery underway
• Above our forecast and consensus. 3Q09 net profit was S$126.7m (-5% yoy), beating consensus expectations and 20% above our forecast (34% of our full-year estimate). The outperformance came mainly from higher-than-expected operating revenue of S$327.1m (-5% yoy) and lower-than-expected operating expenses thanks to lower-than-expected newsprint costs. In line with our expectations, SPH booked investment gains of S$17.6m. 9M09 revenue was flat at S$954.5m while net profit was S$286.8m (-16.9% yoy), to make up 76% our estimate.
• Ad demand beat expectations. 9M09 print ad revenue declined 16.4% yoy to S$493.7m vs. our forecast of a 20% decline while circulation revenue rose 3.6% to S$160.3m vs. our forecast of a 1% improvement. We modify our assumption from a 20% decline for print ad revenue (pegged to previous recessions) to a 17% decline as we expect 4Q09 print ad revenue to be fairly similar to YTD trends.
• Improving outlook. We continue to believe that ad demand is near a bottom and project a faster recovery for print ads in FY10-11. Concerns over buyers defaulting on Sky@eleven residential units should ease now that property prices have risen with the last transacted price for this project significantly above the launch price of S$975psf. Full-year newsprint costs are likely to be below US$800/MT given that 9M09 newsprint charge-out was US$791/MT.
• Maintain Outperform. We have raised our FY09-11 earnings estimates by 1-6% on the better-than-expected media earnings. We believe SPH’s dominant position in newspaper advertising in Singapore will continue to serve it well. Maintain Outperform with a higher sum-of-the-parts target price of S$3.62 (from S$3.52) following our earnings upgrade.
SPH – DMG
Ads recover
Positive numbers in-line with expectations; TP raised. SPH turned in a set of credible results, thanks once again to the Property segment, which witnessed an acceleration in contribution from its Sky@eleven project. Ad revenue also picked up versus 2QFY09. While we maintain our forecast, we have upped our price target to S$3.59 from S$3.40 previously, due largely to higher valuation ascribed to Paragon (S$1.98b, from S$1.69b). Dividend yield of 6.8% remains attractive, and should lend downside support as the market consolidates. Maintain BUY.
A better performance QoQ. 3QFY09 revenue and net profit both declined by 5% to S$327.1m and S$126.7m respectively. On a QoQ basis, however, the company experienced turnover growth of 13.9% while bottomline surged by 45.6% (recurring earnings: +39.9%). What was commendable was the print business, which saw revenue rise 8.5% QoQ (print ads +9.3%) and suggests the worst is over. Margins showed a general improvement in 3QFY09 with operating margins increasing due to an 18.9% drop in staff costs. Pick-up in classifieds. We see some life being injected back into the classifieds, with the strong pick-up in the property market. The recent news that firms are starting to hire again should drive demand for recruitment
section in the next few quarters.
Newsprint costs to head south. Charge out price increased by 32.5% to US$779 per tonne in 3QFY09 although it dropped 5.8% QoQ. We expect newsprint costs to fall to US$700 per tonne in 4QFY09 and average US$689 per tonne in FY10, which should prop up margins.
Dividends remain a draw. At S$3.21, it offers a dividend yield of 6.8% in FY09, well above the market average. There are worries that the Sky@eleven project is one-off and would leave a big vacuum when it is completed next year. But based on our estimates, the core print business and Paragon will be able to generate at least S$320m in recurring income. Assuming 100% payout, the yield post-Sky@eleven is still a palatable 6.3% at the minimum.
SPAusNet – The Australian
SP AusNet boss’s pay leaps 60pc as profit plunges
SINGAPORE-BACKED SP AusNet has defended a 60 per cent jump in annual remuneration for its managing director despite a fall in the company’s security price and profit over 2008-09.
Stapled security holders gathered yesterday for the company’s annual general meeting in Melbourne to vote on its remuneration report and other resolutions and to hear a yearly update from its key executives.
SP AusNet remuneration committee chairman George Lefroy told the meeting he was aware of investor concerns about the plan to increase managing director Nino Ficcau’s annual pay.
“I would like to acknowledge security holder and community concern and interest in executive remuneration particularly in these challenging times,” Dr Lefroy said.
There was an outcry in May when SP AusNet, which is backed by Singapore Power and runs Victoria’s high-voltage electricity transmission network, said it would award Mr Ficca a $412,461 cash bonus, despite the utility posting a 6.7 per cent dip in its net profit for this financial year.
Dr Lefroy told shareholders yesterday Mr Ficca had been rewarded for “operational excellence” and the role he played in developing business strategy and “guiding and driving specified business outcomes”.
Mr Ficca’s total reportable remuneration for 2008-09 had risen by 60 per cent to $2.4 million, from $1.5m last financial year, he said. “The key reason for this increase is the long-term incentive plan,” Dr Lefroy said.
He stressed that the reportable remuneration was not the same as take-home pay because it included accounting valuations for current and historical equity grants that may or may not materialise.
The managing director’s remuneration package included fixed remuneration of $802,000 an on-target short-term incentive of $401,000 in cash, and a maximum long-term incentive payment of about $750,000, which he must convert on-market into securities.
Dr Lefroy he said a review in May last year showed a correction was needed in directors’ fees and the salaries of the managing director and other executives, for it to remain competitive.
The remuneration jump for Mr Ficca comes despite the company’s stapled securities price falling to 88.6c at the end of its March year, from $1.20 a year previously. SP AusNet shares fell 0.5c yesterday to 77c. Despite the protests, security holders later voted in favour of the company’s remuneration report.
Mr Ficca told the meeting his company report card for the year had included a number of positive achievements.
The net profit result, the connection of 26,400 new customers, the refurbishment and upgrade of key transmission stations and a high level of customer satisfaction were among the year’s highlights, he said.
SP AusNet’s power infrastructure was affected by the fatal Victorian bushfires earlier this year. Some Kinglake residents affected by the fires have launched a class action against SP AusNet, alleging faulty power lines started some of the blazes. The firm is defending the claim.