- 4QFY8/14 results disappointed on high staff costs. Revenue down 3.9% YoY. Core operating income up 1.8%. Outlook remains unexciting.
- Core media business to languish from tepid economy and property-market weakness. Risks of DPS cuts in FY8/15E.
- Maintain HOLD & SOTP TP of SGD4.10. Weak earnings outlook compensated by decent yields of 4.8%.
4QFY8/14 results missed our expectation by 7% on high staff costs. Revenue was SGD304.5m, down 3.9% YoY, on a 7.9% decline in media revenue. Property was the only bright spark, with revenue up 3.8%. Rental income grew for Paragon and Clementi Mall. A third mall, Seletar Mall, will open next month.
The revenue weakness was partly saved by a 5.7% YoY decline in operating costs on lower newsprint costs and factory overheads. As a result, core operating profit — profit before investment income and JVs — rose 1.8% YoY to SGD80.2m. Bottom line was further enhanced by higher investment gains and fair-value gains frominvestment properties. A full-year DPS of 21 SGD cts was lower than last year’s 22 SGD cts (excluding an 18 SGD ct special dividend) but higher than our 20 SGD cts.
Maintain HOLD & SOTP TP
SPH’s core media business is likely to languish further amid a modest economic outlook and weak property market. EPS CAGR is an unexciting 3.0% forecast for FY8/14-17E. Though 4.8% yields are decent, there are risks that SPH may cut dividends in FY8/15E, as its FY8/14 payout has exceeded 100%. We keep EPS largely unchanged. Maintain HOLD and TP of SGD4.10.
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