Singapore Press Holdings

UOBKayhian on 16 June 2014

FY14F PE (x): 26.2
FY15F PE (x): 24.7

3QFY14 adspend remains weak. Our monthly page monitor of The Straits Times suggests advertising spending (adspend) remains weak, with a contraction of 10% yoy in 3QFY14 (Mar-May 14). However, we estimate actual contraction could be less severe, at 7-8% yoy. This mirrors 2QFY14’s actual contraction of 7.3% yoy. Singapore Press Holdings (SPH) had earlier posted disappointing results for 2QFY14. It registered advertising revenue contraction of 7.3% yoy for 2QFY14, larger than the 2.9% yoy contraction in 1QFY14. SPH had attributed 2QFY14’s large contraction to fewer property launches and car ads. However, revenue for the property segment rose by 3% yoy to S$51.7m in 3QFY14, on the back of higher rental income and full occupancy rates.

Flat share price but dividend yield is decent. SPH’s print revenue is expected to perform in tandem with Singapore’s projected moderate real GDP growth of 4.3% for 2014. Traditionally, share price has a good relationship with domestic economic growth. Share price is expected to be flat, but annual dividend yield of 4.4-4.6% for FY14-16 is decent amid a low interest-rate environment. Maintain HOLD and target price of S$4.00, based on sum-of-the-parts (SOTP) valuation. Our recommended entry price is at S$3.80 and below.