OCBC Investment Research 2015-07-10: SPH - Improved numbers from non-core segments. Maintain HOLD.

Singapore Press Holdings: Improved numbers from non-core segments 

  • Better numbers from non-core 
  • Cost pressures well contained 
  • Ad market continues to be weak 

3QFY15 PATMI up 9.6% YoY to S$98.2m 

  • Singapore Press Holdings (SPH) reported that its 3QFY15 PATMI increased 9.6% YoY to S$98.2m mostly due to higher other operating income (corporate events and write-back of contingent consideration for an acquired business) and a smaller loss from JV and associates (improved performance from the regional online classifieds business). 
  • In terms of the top-line, 3QFY15 revenues slipped 0.9% YoY to S$306.8m mainly because of a S$13.9m decline (down 5.6% YoY) from the group’s media business; this was partially offset by stronger numbers from the property segment, which was boosted by higher rental income from Paragon and The Clementi Mall and the opening of Seletar Mall last Nov, and higher revenues from the group’s other businesses due to new shows and timing of show dates for the exhibitions businesses. 
  • YTD PATMI now constitutes 88.5% of our full year FY15 estimates and overall we judge this quarter’s numbers to be above expectations due to better than anticipated performances from the group’s non-core segments and regional classified businesses. 

Core ad business continue to decline 

  • The group continued to struggle with declining demand in the advertising market over this latest quarter, and 3QFY15 total newspaper ad revenues fell 9.0% YoY with classified and display down 12.6% and 7.1% YoY, respectively. 
  • On a more positive note, similar to what we saw last quarter, cost-side pressures appear to be well-contained. 
  • 3QFY15 staff costs and “material, production, and distribution” costs both decreased 2.3% and 4.8% YoY, respectively. The group’s average headcount was kept flat at 4,298 as at end 3QFY15 (versus 4,290 as at end 3QFY14). 
  • While average monthly consumption of newsprint increased to 7,830MT over 3QFY15 (versus 6,811 as at end 2QFY15), the price of newsprint continued its decline to US$546 this quarter from US$573 as at end 2QFY15. 
  • Maintain HOLD rating with an unchanged fair value estimate of S$3.85

(Carmen Lee)

Source: http://www.ocbcresearch.com/