Singapore Press Holdings

OCBC on 15 Oct 2012

Singapore Press Holding (SPH) reported FY12 PATMI of S$365.5m (EPS: 23 S-cents), which fell 5.9% YoY mostly due to lower print and investment income, offset by contributions from the Clementi Mall. This is mostly in line with our forecast (2.4% below) but somewhat below consensus (by 5.1%). Management recommended a final dividend of 17 S-cents, cumulating to 24 S-cents (or S$387m) for FY12 - which was above FY12 PATMI and our expectations - though below FY12 recurring EBITDA. We note that pretax margins for the print segment fell further to 33.3% in FY12 from 35.9% in FY11, due to higher staff costs and distribution costs from subscription drives. We believe shrinking margins highlight increasing uncertainties for the core print business, though an attractive dividend yield of 5.9% likely points to limited price downside here. Maintain HOLD with an unchanged fair value estimate of S$4.05. We would turn buyers around S$3.90.

FY12 results mostly in line
Singapore Press Holding’s (SPH) reported FY12 (ending 31 Aug 2012) PATMI of S$365.5m (EPS: 23 S-cents), which fell 5.9% YoY mostly due to lower profits from the newspaper and magazine segment and lower investment income, offset by an increase in property income from the Clementi Mall's contribution. We judge FY12 results as mostly in line with our forecast (2.4% below) but somewhat below consensus (by 5.1%). Management recommended a final dividend of 17 S-cents, cumulating to 24 S-cents (or S$387m) for FY12 - which was above FY12 PATMI and our expectations - though below FY12 recurring EBITDA. In terms of the topline, we saw a 1.8% increase - driven mostly by income from the Clementi Mall and the newly-acquired exhibitions business.

Print margins still contracting
Revenues from the newspaper and magazines segment fell 1.0% - a marginal decline due to lower demand for recruitment classified ads. Pretax margins for the segment, however, fell further to 33.3% in FY12 from 35.9% in FY11. This is mainly attributable to a 3.4% increase in staff costs from the acquisition of ACP Magazines and newspaper subscription drives which drove distribution costs up 23.4% (S$5.4m). Newsprint costs were mostly unchanged as average newsprint charge-out prices and consumption stayed flat.

A full year’s contribution from the Clementi Mall
Paragon achieved a 3.4% increase in rental income from positive rental reversions, and we saw the Clementi Mall put in its maiden full year rental income contribution of S$18.6m. The proposed Seletar Mall (Sengkang) is now expected to be completed by end 2014.

Maintain HOLD
We continue to believe that falling margins highlight increasing uncertainties for SPH’s core print businesses, though an attractive dividend yield of 5.9% likely points to limited price downside from here. Maintain HOLD with an unchanged fair value estimate of S$4.05. We would turn buyers around S$3.90.