Maybank Kim Eng Research 2015-07-10: SPH - Steady As Always. Maintain HOLD with TP Raised.

Steady as always 

  • 3QFY8/15 results beat. Revenue up 0.5% YoY, net profit up 9.6% YoY. 
  • Raise EPS by 4-5% for lower financing costs. 
  • Maintain HOLD given uninspiring growth, with support from yields. Raise SOTP TP to SGD4.10 from SGD4.06 after EPS changes

Results beat 

  • 3QFY8/15 net profit was up 9.6% YoY, slightly beating our forecast. 
  • 9M EPS formed 80% of our full-year forecast. 
  • Revenue was up 0.5% YoY to SGD314m on a 16.5% increase in the property segment. The latter came from Seletar Mall’s maiden contributions. 
  • Media was still weak, down 5.6% YoY, though it improved 14.9% QoQ. 
  • Bottom line was boosted by a 2.4% YoY decline in operating costs. 
  • Material, production and distribution costs were 4.8% lower YoY due to lower newsprint costs. 
  • The company expects newsprint prices to soften in the near term in view of weak demand. 
  • Lower staff costs were due to less bonus provisions. 

Maintain HOLD with higher TP 

  • We think media’s QoQ improvement was led by seasonality. 
  • A strong recovery is not likely given muted economic growth and a challenging media landscape. That leaves property its only growth driver, in our view. 
  • Maintain HOLD given its uninspiring growth outlook, with decent 5% yield support expected
  • We raise our net-profit forecasts by 4-5% for the next three years to factor in lower financing costs after the redemption of its SGD600m MTN in March. 
  • As a result, our SOTP TP rises from SGD4.06 to SGD4.10.

(Wei Bin)

Source: http://www.maybank-ke.com.sg