SINGAPORE PRESS HLDGS LTD
T39.SI
SPH (SPH SP) - EBIT Margin Supported By Lower Costs
- Singapore Press Holdings (SPH)'s 1Q18 results in line, ad spend continues to decline but at a slower rate.
- EBIT margin improved on lower staff, newsprint and retrenchment costs.
- Expect operating earnings to be supported by lower staff costs.
- Maintain HOLD with S$2.78 Target Price based on Sum-Of-The-Part valuation.
What’s New
1Q18 earnings in line.
- Core operating profit for 1Q18 was S$76.7m (-2.1% y-o-y), in line with expectations.
- Revenue declined 7% y-o-y to S$259m while cost of sales declined by 5.3% and operating expenses fell by a stronger 22.6% y-o-y. This led to a 1.4ppt improvement in EBIT margins to 29.6%.
- Headline net profit was S$60.4m (+32.1% y-o-y), largely due to better investment income performance of S$12.4m versus S$1.8m loss in 1Q17.
Lower revenue led by lower advertising revenue.
- The Media Segment’s revenue fell 14% y-o-y, as a result of lower advertising revenue of S$121m (-16.7%).
- Property revenue remained stable at S$61.2m while other businesses grew 48.2% y-o-y to S$23.6m from a low base of S$15.9m.
- Display (-17.9% y-o-y), classified (-12.5% y-o-y) and newspaper ad revenue (-16.3% y-o-y) declined at the slowest rate in the last five quarters.
Lower costs, slightly better EBIT margin.
- Most cost items were lower, led by lower newsprint costs, bonus provision, depreciation and retrenchment costs.
- Net operating expenses hence declined by 8.8% y-o-y to S$182.4m leading to EBIT margin improvement.
Maintain HOLD, TP S$2.78.
- We expect FY18F DPS to be maintained at 15 Scts. The declining ad spend outlook should be mitigated by staff rationalisation, which would help to support operating earnings and DPS.
- We leave our earnings estimates and Target Price largely unchanged.
- Maintain HOLD and S$2.78 Target Price.
Alfie YEO
DBS Vickers
|
Andy SIM CFA
DBS Vickers
|
http://www.dbsvickers.com/
2018-01-15
DBS Vickers
SGX Stock
Analyst Report
2.78
Down
2.790
