SINGAPORE PRESS HLDGS LTD
T39.SI
Singapore Press Holdings: Lower one-time gains hits bottom-line
FY15 earnings hit by lack of one-time gains Ad market remains challenging
Lower FV estimate to S$3.78
FY15 earnings hit by lower one-time gains
- Singapore Press Holdings (SPH) reported that its FY15 PATMI fell 20.4% to $S321.7m mostly due to lower fair value gains on investment properties and the absence of a S$52.9m divestment gain from the partial sale of 701Search to Telenor last year, which were partially offset by smaller losses from the group's share of results of associates/JVs in the current fiscal year.
- After squaring off one-time items, we judge these results to be marginally below expectations as FY15 operating profit comprises 88.3% of our full year forecast, with a steeper-than-anticipated dip in the media numbers being the key driver for the miss.
- In terms of the topline, FY15 revenues decreased 3.1% to S$1,177.1m due to lower contributions from the media business which dipped 6.3% (S$60.9m) to S$902.5m. This was partially offset by increased property income which increased 12.6% (S$25.8m).
- Also, due to considerable cost-side discipline, FY15 operating profit increased marginally by 1.3% (S$4.5m). A final dividend of 13 S-cents was recommended – 1 S-cent lower than last year’s.
Unabated pressure on advertising revenues
- The advertising numbers continue to look uninspiring in 4QFY15, with total newspaper ad revenues falling 8.4% YoY. (Display and classifieds both fell 7.1% and 11.0%, respectively.) We understand from the group that they have been focused on managing the cost base and as a result, key cost-side items, including material and production costs, staff costs and other operating expenses all showed credible YoY declines. In particular, the cost of newsprint fell 16.1% while other materials, production and distribution costs fell 8.9%.
- From the real estate segment, FY15 net property income increased 17.3% with a maiden contribution from Seletar Mall; both the Paragon and The Clementi Mall also recorded higher rental income.
- We update our valuation model for softer assumptions for the media business and our fair value estimate dips to S$3.78 from S$3.85 previously.
- Maintain HOLD.
Carmen Lee CFA
OCBC Securities
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http://www.ocbcresearch.com/
2015-10-14
OCBC Securities
SGX Stock
Analyst Report
3.78
Down
3.85
