Singapore Press Holdings - CGS-CIMB Research 2021-01-19: Improving Non-Media Segments; HOLD With Higher Target Price.

SINGAPORE PRESS HLDGS LTD (SGX:T39)

Singapore Press Holdings - Improving Non-Media Segments

Media adspend continued to weaken y-o-y in 1QFY8/21 but improved q-o-q.
Improving non-media segments partially offset the weaker adspend.
We reiterate our HOLD call on SPH but raise the target price. Lack of near-term catalysts.

SPH (SGX:T39)’s 1QFY21 (Sep 20 to Nov 20) total circulation rose 1.8% y-o-y, helped by 26.5% y-o-y increase in digital circulation. (See SPH's announcement dated 18-Jan -21 for corporate presentation).
Digital circulation now accounts for 52% of the total circulation, increased from 42% over the same period last year. As expected, print (-36% y-o-y) and digital (- 8.1% y-o-y) ad revenue declined as businesses tightened marketing budget. Ad revenue however improved on a q-o-q basis boosted by yearend festive seasons and improving business conditions due to the stabilising number of COVID-19 cases in the country.
We understand that SPH's media business remained profitable in 1QFY21, helped by JSS and COVID-19 related grants.
2QFY21 adspend should be relatively stable q-o-q, supported by festive seasons and better business sentiment. We think raising prices of subscriptions would be one of the immediate ways to lighten the impact of a structural decline.

Its listed malls in Singapore saw encouraging improvement in tenant sales (-29% to -11% y-o-y in 1QFY21) but footfall recovery (-54% to -34% y-o-y) lagged behind tenant sales due to pent-up demand and as many are still working-from-home. Malls in Australia recovered faster than Singapore with tenant sales at 92-99% and footfall at 82% of pre-COVID-19 levels. We understand that Seletar Mall is also recovering well. See SPH REIT - CGS-CIMB Research 2021-01-14; Expect Gradual Improvement.
PBSA remained stable and has achieved 88% of target revenue for Academic Year 20/21. If not for the spike in COVID-19 cases in the UK recently, SPH would have achieved 89% of the targeted revenue. We understand that many of the students are still going back to universities or still staying in the accommodation. Considering this, SPH is not likely to offer a refund option this time round, in our view. Bookings have started for Academic Year 21/22 with 17% of target revenue achieved as at 8 Jan 2021.
Aged-care is another source of stable income for SPH. Orange Valley occupancy rate improved from 80% in Aug 2020 to 81% in Nov 2020 while Japan assets occupancy remained in the high 90s.
Woodleigh Residence’s sales continued to gain traction with 60% of total units sold on 8 Jan 2021 vs. 56% on 4 Oct 2020.

See SPH Share Price; SPH Target Price; SPH Analyst Reports; SPH Dividend History; SPH Announcements; SPH Latest News.
We keep our HOLD call on SPH but raise our SOP-based target price due to higher value ascribed to the investment in iFAST (SGX:AIY). See iFAST Corporation - CGS-CIMB Research 2021-01-13: Keeping Up The Trading Momentum.
While we believe downside has been priced in at 0.5x P/BV (-2 s.d. from 5-year mean) as current SPH share price almost implies a zero value for its media business, we see limited catalysts for now. If we narrow our holding discount from 30% to 25% for potential value-unlocking of its PBSA, our target price will increase to S$1.41. See SOP valuation details in PDF report attached below.
Upside risk: value-unlocking of its portfolio.
Downside risks: weaker-than-expected adspend.

EING Kar Mei CFA CGS-CIMB Research | LOCK Mun Yee CGS-CIMB Research | https://www.cgs-cimb.com 2021-01-19

SGX Stock Analyst Report HOLD MAINTAIN HOLD 1.31 UP 1.100