Monday, 14 April 2014


Kim Eng on 14 Apr 2014
  • SPH reported a set of weak 2QFY8/14 results with flattish revenue and a 12.8% YoY drop in core operating profit.
  • We trim our revenue and net profit forecasts for FY8/14E-16E by 1-3%. Earnings growth expected to stay weak as core media business continues to languish.
  • Share price may be supported by its decent dividend yield of almost 5%. Maintain HOLD with a lower TP of SGD4.10.
What’s New
SPH reported a set of weak 2QFY8/14 results. Revenue was in line, slightly down by 1.3% YoY, due to continually weak media business.  The major miss resulted from higher-than-expected operating costs (+13.7% YoY), attributed to two one-off charges: a SGD9.9m impairment charge on removal of one of its press lines, and a SGD10.4m special bonus. This was offset by a SGD52.9m gain on divestment of 701Search, an online classified website, which lifted PATMI by 7.5% YoY. However, 2QFY8/14 core PATMI collapsed 39.6% QoQ, dragged down by weak top-line growth (-15.1%). An unchanged interim DPS of SGD0.07 was declared.

What’s Our View
As a result, we trim our revenue and net profit forecasts by 1-3% for FY8/14E-16E. Our SOTP-based TP thus falls to SGD4.10 from SGD4.18. We expect SPH’s core media business to continue to languish given the modest outlook for the economy and our negative view on the property market. The property division is likely to remain the only growth driver, albeit a weak one. Paragon and The Clementi Mall remained fully occupied and their revenue contribution grew 4.2% YoY in 1HFY8/14. While a 4.7% dividend yield may cap share price downside, SPH’s unexciting growth profile with core EPS CAGR of 1.2% over FY8/14E-16E supports our HOLD recommendation.

No comments:

Post a Comment