Singapore Press Holdings

UOBKayhian on 19 Dec 2014

FY15F PE (x): 22.1
FY16F PE (x): 21.4

We expect SPH’s advertising revenue contraction to taper off in FY15. While our page monitor of The Straits Times points to an adspend contraction of 7% yoy in 1QFY15, we expect the contraction to taper off more noticeably in 2QFY15. While we do not see any near-term share price catalysts, the annual dividend yield of 4.9% remains decent.

Maintain HOLD. Target price: S$4.30. Entry price: S$4.00 and below.
Advertising revenue contraction tapers off. We expect Singapore Press Holdings’ (SPH) advertising revenue (AR) contraction to taper off in FY15. Our monthly page monitor of The Straits Times suggests advertising spending (adspend) contracted by 7% yoy in 1QFY15 (Sep-Nov 14). This contraction is less than 4QFY14’s -10% yoy and 3QFY14’s 9% yoy. By 2QFY15 SPH’s AR would see the full negative impact of the total debt service ratio (TDSR) measures imposed by the government at end-Jun 13 to curb property purchases. This caused a major negative impact on property launches and property-related advertising. We expect to see a flat AR by 2QFY15. The total number of pages for each of the last three quarters (3QFY14-1QFY15) has been relatively stable.