Friday, 28 March 2014

Singapore Press Holdings

UOBKayhian on 28 Mar 2014

FY14F PE (x): 22.5
FY15F PE (x): 22.5
Adspend contraction widens in 2QFY14. Our monthly page monitor of The Straits Times suggests advertising spending (adspend) remains weak, with a contraction of 8% yoy in 2QFY14 (Dec 13 to Feb 14). However, we estimate actual contraction could be less severe, at 5% yoy. Our page monitor had earlier implied an adspend contraction of 5% yoy for 1QFY14. SPH subsequently reported actual adspend contraction of 3% yoy.

2QFY14 results preview. Traditionally, 2QFY13 is a seasonally weak earnings quarter. We estimate a net profit of S$70m for 2QFY14. Overall, FY14-16 net profit is projected to be lower than FY13’s due to the absence of exceptional gains and the 30% minority interest in SPH REIT. We expect interim DPS to be maintained at 7 S cents. Maintain HOLD. We maintain our target price of S$4.00 (ex-div basis) based on sum-ofthe- parts (SOTP) valuation. Our recommended entry price is at S$3.80 and below. Earnings forecast revision pending results. We currently forecast flat print revenue for FY14 before rebounding to a mild 3% for FY15 and FY16. However, we are likely to tweak our earnings forecasts as print revenue for 1HFY14 is likely to be marginally below our expectation. Key earnings risks are a significant weakness in advertising revenue and further de-rating in yield stocks when interest rates resume the uptrend.

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