Singapore Press Holdings SPH - OCBC Research 2016-04-13: Cost management delivering results

Singapore Press Holdings SPH - OCBC Research 2016-04-13: Cost management delivering results SINGAPORE PRESS HLDGS LTD T39.SI 

Singapore Press Holdings: Cost management delivering results 

  • Ad revenues continue downtrend 
  • Increasing newspaper prices 
  • Property contributions remain firm 

Unabated pressure on the media topline 

  • Singapore Press Holdings (SPH) reported that its 2QFY16 PATMI decreased 19.6% YoY to S$63.8m mostly due to lower revenues from its media segment, weaker net income from investments and lower share of results of associates due to the absence of a S$7.4m restructuring gain booked in the corresponding quarter last year; partially offset by lower materials, production and distributions costs, staff costs, finance costs and other operating expenses. 
  • In terms of the topline, 2QFY16 revenues dipped marginally from S$275.4m a year ago to S$259.3m. 
  • Unsurprisingly, we saw continued pressure on the media segment topline which fell 6.0% to S$190.7m in the latest quarter, while property and other revenues partially offset this with 0.9% and 9.5% YoY growth to S$61.1m and S$7.5m, respectively. 
  • Overall, we deem this quarter’s results to be broadly within expectations. 
  • SPH declared an interim dividend of 7.0 S-cents, which was unchanged from last year and similarly within expectations. 

Rolling out increases in newspaper cover prices 

  • The advertising market remained soft over the latest quarter, with total newspaper ad revenue down 8.4% YoY (display ad revenues down 7.6% and classified down 9.9%). 
  • In 1H16, management had focused on keeping costs low and this has yielded results. 
  • Newsprint costs, staff costs and other materials, production and distribution costs all fell 10.7%, 4.9% and 1.9%, respectively. 
  • We understand that management is rolling out increases in newspaper cover prices; this is expected to marginally boost circulation revenues which currently constitutes 14.6% of 1H16 operating revenues of S$555.5m. 
  • In the property segment, 1H16 net property income grew 8.2% to S$88.7m, boosted by Seletar Mall which commenced business in Nov 2014 and higher rental income from Paragon and The Clementi Mall. 
  • Maintain HOLD with an unchanged fair value estimate of S$3.78. 

Carmen Lee CFA OCBC Securities | http://www.ocbcresearch.com/ 2016-04-13
OCBC Securities SGX Stock Analyst Report HOLD Maintain HOLD 3.78 Same 3.78