Singapore Press Holdings (SPH) - UOB Kay Hian 2019-06-06: Potential Beneficiary Of US-China Trade War From Shift Of Chinese Students To The UK


Singapore Press Holdings (SPH) - Potential Beneficiary Of US-China Trade War From Shift Of Chinese Students To The UK

  • The trade war has triggered China to issue an official warning on 3 Jun 19 to students hoping to study in US universities. This could benefit UK universities, which have attracted more Chinese students.
  • Recent refinancing of a £205m term loan facility to a longer tenure demonstrates SPH’s commitment to long-term investment in UK PBSA, along with the divestment of Chinatown Point which enhances capital recycling.
  • Maintain BUY and target price of S$2.86.


China issued official warning to students hoping to study in US universities.

  • On 3 Jun 19, the Education Ministry of China urged Chinese citizens to undertake risk assessment before attempting to get US visas as some Chinese students have faced issues in visa application and extension. There have also been accounts of dismissal of Chinese academics from US universities.
  • China is the largest source of international students in the US, accounting for around 31% of the total, according to the US Department of Homeland Security.

When one door closes, another opens; UK winning share of Chinese students and could benefit further.

  • UK universities have seen a marked increase in Chinese undergraduate students, with enrolment increasing by up to 9% in 2017/18, according to Higher Education Statistics Agency (HESA), in contrast to a decline seen by US universities, a reversal of the growth trend prior to the Trump administration. Applications for the new academic year show that the trend continues to favour UK universities, with Chinese applicants rising 33% y-o-y in Jan 19 to a record high, according to University and College Admissions Service (UCAS).

Inspired new strategy of international student growth by UK government.

  • The UK Department of Education has also released an international education strategy, aiming to increase the number of international students by 30% from 460,000 currently to 600,000 by 2030. New measures include providing visa extensions for international students looking for post-study work.
  • On the back of Brexit uncertainties, the strong show of support for the country’s robust university sector is a welcomed approach for student accommodations.

Checking in on student accommodation assets; premium acquisition more sustainable.

  • Tracking SINGAPORE PRESS HOLDINGS (SPH, SGX:T39)’s purpose-built student accommodation (PBSA) assets ahead of the new academic year, booking rates seem to be in good shape for its recent additions. Portfolio acquisitions made in Apr 19 have already had a substantial amount of beds sold out for the school term.
  • Compared to competition in the area, the asset’s customer ratings are also higher, with better reviews commenting on their more premium quality and service. We believe the assets in the Apr 19 acquisition are likely to be more sustainable in the long term, given on par or better popularity among competition in the vicinity.

Refinancing of £205m term loan shows commitment to long-term investment in the UK.

  • Refinancing of £205m term loan facility on 3 Jun 19 to a longer tenure of four years demonstrates SPH’s commitment to invest long term in UK student accommodation assets.
  • SPH has also completed the divestment of Chinatown Point recently, a continuation of its capital recycling exercise in favour of higher-yielding PBSA assets.


UK universities proving a good alternative for Chinese students.

  • While a restrictive policy may beset US universities, strong university rankings and growth initiatives from the government look set to allow the UK universities to thrive from a growing international base of Chinese students.

Sustainable prospects for more premium asset class.

  • SPH’s recent PBSA assets are proving to be more premium quality accommodation, revolving around upper mid-tier universities. These are likely to be more sustainable, and possibly allow it to ride on the wave of Chinese student growth. SPH’s current acquisitions in PBSA amount to S$20m in estimated net profits and growth may be expected upon further acquisitions.


  • None.


  • Acquisition of student accommodation assets

Lucas Teng UOB Kay Hian Research | John Cheong UOB Kay Hian | https://research.uobkayhian.com/ 2019-06-06
SGX Stock Analyst Report BUY MAINTAIN BUY 2.860 SAME 2.860