Singapore Press Holdings

UOBKayhian on 5 Mar 2015

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

Advertising revenue contraction continues to taper off. We expect Singapore Press Holdings’ (SPH) advertising revenue (AR) contraction to continue to taper off in FY15. Our monthly page monitor of The Straits Times suggests advertising spending (adspend) contracted 5% yoy in 2QFY15 (Sep-Nov 14) vs a reported advertising revenue contraction of 9% yoy in 1QFY15. This contraction is less than 4QFY14’s -10% yoy and 3QFY14’s -9% yoy. By 2QFY15. February saw a large contraction of 12% yoy because of the Chinese New Year holiday which fell on 19 February this year vs 31 January last year. 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 propertyrelated advertising. Flat share price but dividend yield is decent. SPH’s print revenue is expected to perform in tandem with Singapore’s muted GDP growth which is projected at 3.3% for 2015. Traditionally, the share price has had a good correlation with domestic economic growth. The share price is expected to be flat, but annual dividend yields of 4.9% for FY15-17 are decent amid a low interest-rate environment. Maintain HOLD. Our target price of S$4.30 is based on a SOTP valuation. Our recommended entry price is S$4.00 and below.