• Market appears to be anticipating a good set of numbers from SPH, including a higher special dividend. (SPH will release results for its final quarter / full year ended Aug ’10 on Tuesday Oct 12th. For ye Aug ’09, while maintaining normal final dividend at 9 cents, SPH had cut the special by 1 cent to 9 cents.)

• Reported net profit for 9 months ended May ’10 came to $422.59 mln, vs $286.78 mln for the same period a year ago. Excluding exceptionals, the respective numbers would be $437.24 mln vs

$341.60 mln.

• The stock ran up 4 cents to $4.25on Thursday, the highest since Aug ’08, thereby breaching, albeit modestly, the $4.20 support-turned-resistance level. (SPH had in Aug ’08, broken-down from the $4.20-4.72 range that had held from Jan ’07 to July ’08.)

• Fact is, print advertising has been picking up nicely along with the strong economy.

• On Saturday Oct 2nd for instance, BMW took up 2 full-page and 7 half-page advertisements as it launched its new 7 series, extolling the 7 principles of leadership.

• And BMW is not alone, as other European marques Mercedes Benz, Audi have also been aggressively pushing their latest.

• We maintain BUY.

• Market appears to be anticipating a good set of numbers from SPH, including a higher special dividend. (SPH will release results for its final quarter / full year ended Aug ’10 on Tuesday Oct 12th. For ye Aug ’09, while maintaining normal final dividend at 9 cents, SPH had cut the special by 1 cent to 9 cents.)

• Reported net profit for 9 months ended May ’10 came to $422.59 mln, vs $286.78 mln for the same period a year ago. Excluding exceptionals, the respective numbers would be $437.24 mln vs

$341.60 mln.

• The stock ran up 4 cents to $4.25on Thursday, the highest since Aug ’08, thereby breaching, albeit modestly, the $4.20 support-turned-resistance level. (SPH had in Aug ’08, broken-down from the $4.20-4.72 range that had held from Jan ’07 to July ’08.)

• Fact is, print advertising has been picking up nicely along with the strong economy.

• On Saturday Oct 2nd for instance, BMW took up 2 full-page and 7 half-page advertisements as it launched its new 7 series, extolling the 7 principles of leadership.

• And BMW is not alone, as other European marques Mercedes Benz, Audi have also been aggressively pushing their latest.

• We maintain BUY.

Cash falling from the Sky

• SPH estimated to have collected S$429m cash from Sky11 on TOP, equating to 27Scts/share

• Final/special dividend could exceed consensus’ expectations; we expect 24 Scts/5.7% final yield

• Buy ahead of full year results on 12 Oct. Reiterate Buy, SOP backed TP raised to S$4.52

Expect above-consensus final dividend; we look for 24 Scts final/special at full year. We are hopeful that final/special dividends to be declared at full year could beat consensus’ average of c.19 Scts. We have raised our final/special dividend expectation to 24 Scts premised on: (i) large cash inflow from Sky11; (ii) strong recovery in AdEx supported by economic growth; and (iii) historical track record of a payout of above 80% of PBIT.

Chunk of cash (S$429m) falling from the Sky. As at end 3Q10, SPH had S$663m in accounts receivables. Of this, we estimate that about S$530m were receivables from Sky@Eleven (Sky11), as the property development project was on the deferred payment scheme. Netting off 15% of sales proceeds (c.S$101m) to be collected upon transfer of legal title (expected about 1 year from TOP), we estimate that the Group will have collected/will be collecting c.S$429m in cash, equating to c.27 Scts/share or a cash yield of 6.4%.

AdEx shows strong YTD growth of 13.8%; dividend payout >80% PBIT. Operations remain firm, with Nielsen Media Research’s display & classified AdEx registering YTD growth (Sep’09-Jul’10) of 13.8%. July’s growth was 20% yoy. History has shown that dividend payout has also been above c.80% PBIT for the past 10 years, except for last year (76%). We believe this practice should continue, on the back of firm fundamentals and operations.

Buy ahead of results release (12 Oct); TP raised to S$4.52. We raised our sum-of-parts TP to S$4.52 as we factor in a higher valuation for Paragon, pegging a 10% discount to latest valuation (S$2.28bn), up from S$1.98bn previously. The possibility of a higher-than-expected final DPS (24 Scts or 5.7% yield) is attractive, leading to a full year dividend yield of 7.4% – 7 cents were paid at interim stage. We reiterate SPH as a top pick among our dividend yield plays, and a proxy riding on the economic recovery in Singapore.

Cash falling from the Sky

• SPH estimated to have collected S$429m cash from Sky11 on TOP, equating to 27Scts/share

• Final/special dividend could exceed consensus’ expectations; we expect 24 Scts/5.7% final yield

• Buy ahead of full year results on 12 Oct. Reiterate Buy, SOP backed TP raised to S$4.52

Expect above-consensus final dividend; we look for 24 Scts final/special at full year. We are hopeful that final/special dividends to be declared at full year could beat consensus’ average of c.19 Scts. We have raised our final/special dividend expectation to 24 Scts premised on: (i) large cash inflow from Sky11; (ii) strong recovery in AdEx supported by economic growth; and (iii) historical track record of a payout of above 80% of PBIT.

Chunk of cash (S$429m) falling from the Sky. As at end 3Q10, SPH had S$663m in accounts receivables. Of this, we estimate that about S$530m were receivables from Sky@Eleven (Sky11), as the property development project was on the deferred payment scheme. Netting off 15% of sales proceeds (c.S$101m) to be collected upon transfer of legal title (expected about 1 year from TOP), we estimate that the Group will have collected/will be collecting c.S$429m in cash, equating to c.27 Scts/share or a cash yield of 6.4%.

AdEx shows strong YTD growth of 13.8%; dividend payout >80% PBIT. Operations remain firm, with Nielsen Media Research’s display & classified AdEx registering YTD growth (Sep’09-Jul’10) of 13.8%. July’s growth was 20% yoy. History has shown that dividend payout has also been above c.80% PBIT for the past 10 years, except for last year (76%). We believe this practice should continue, on the back of firm fundamentals and operations.

Buy ahead of results release (12 Oct); TP raised to S$4.52. We raised our sum-of-parts TP to S$4.52 as we factor in a higher valuation for Paragon, pegging a 10% discount to latest valuation (S$2.28bn), up from S$1.98bn previously. The possibility of a higher-than-expected final DPS (24 Scts or 5.7% yield) is attractive, leading to a full year dividend yield of 7.4% – 7 cents were paid at interim stage. We reiterate SPH as a top pick among our dividend yield plays, and a proxy riding on the economic recovery in Singapore.

Set for bumper profits

Event

• Robust demand for display and job ads during 9M10, as well as sizeable property development profits, appears to have set the Singapore Press Holdings (SPH) on course to report a record net profit for FY Aug10 when it announces its full‐year results, likely on 12 October. Though sales growth in the fourth quarter moderated somewhat, as reflected in the sequential decline in its page count, we expect higher consumer spending and a strong job market to sustain print advertising demand. Maintain BUY with a target price of $4.62.

Our View

• Display ad volume growth moderated in 4QFY Aug10 as the average page count for the Saturday edition of The Straits Times rose by just 13% YoY compared to +28% in the previous quarter. Sequentially this marked a 4% drop. However, we expect the advertising volume to pick up again in 1QFY Aug11 as year‐end festivities kick in.

• With the completion of Sky@Eleven in June, SPH is eyeing new projects. It recently put in the second‐highest bid of $650.9m for a mixed commercial and residential development site at Bedok. At $694

psf, the price seemed fair as it was close to the third and fourth bids.

• Another catalyst is the opening of the 60%‐owned Clementi Mall next January. Crowd‐pullers such as Fairprice Finest, Foodfare and the National Library Board have signed on as anchor tenants. We await an update on the retail tenancy mix and rental rates in the next 4‐6 months.

Action & Recommendation

Our final dividend forecast of 18 cents a share remains intact, implying a full‐year total yield of 6.1% (DPS of 25.3 cents). The core media business currently trades at an implied FY Aug11F PER of 15x, a slight discount to the Straits Times Index. Other long‐term catalysts are growth in consumer spending and possible spin‐off of its property division. Maintain BUY with a target price of $4.62.