Singapore Press Holdings - CGS-CIMB Research 2021-06-17: What's Next For SPH?


Singapore Press Holdings - What's Next For SPH?

  • We took a deep dive into what’s next for SPH (SGX:T39) following its recent proposal to exit media.
  • We deem SPH an integrated real-estate asset manager/owner with quality portfolio worth at least S$6.7bn with S$1.2bn non-core assets for recycling.
  • SPH is not a property developer, with minimum development projects and trading at an attractive ~0.8x FY21F P/B vs peers at 2.5x.

Deep dive into what's next for SPH

  • We looked at
    1. why anyone would be interested in Singapore Press Holdings (SPH) without media,
    2. why SPH should not be benchmarked against property developers but instead potentially labelled as an integrated real-estate asset manager/owner,
    3. breaking down its non-core assets worth ~S$1.2bn, potentially ripe for capital recycling,
    4. whether it makes sense for SPH to be privatised, and
    5. what happens if the media exit plan fails?
  • Reiterate ADD, with higher SOP-based target price mainly to account for
    1. higher value for asset manager (to include Prime US REIT (SGX:OXMU)) and
    2. higher value for iFAST (SGX:AIY) based on our target price.
  • Downside risks include resurgence of COVID-19 cases and weaker-than-expected income from media and investment portfolio.

Integrated real-estate asset manager

  • SPH’s quality portfolio is worth at least ~S$6.7bn which we broadly categorise into
    1. property assets,
    2. asset management,
    3. digital investments, and
    4. other listed investments.
  • Property assets dominate a large part (~S$5.3bn) of its portfolio with quality retail malls in Singapore and Australia, student accommodation assets in the UK and Germany, aged care assets in Singapore and Japan, and partial stakes in Woodleigh mixed development as well as a data centre in Singapore.
  • In FY20, as media business slid into a loss-making position, SPH’s entire EBIT was supported by stable income from its real-estate portfolio above.

Who would be interested in SPH without media?

  • We believe, practically anyone, such as strategic investors/real estate funds that already have a real chairman, Mr. Lee Boon Yang, from 2011 to 23 Apr 2021, and shared joint ownership and legacy investments (see Fig11 in report attached below for comparison of similarities between SPH and Keppel Corp).

S$1.2bn of non-core assets ripe for capital recycling

What if shareholders say no-go to SPH's disposal of media business?

  • Continue to read the 24-page report by CGS-CIMB attached below for complete analysis on SPH.

EING Kar Mei CFA CGS-CIMB Research | LIM Siew Khee CGS-CIMB Research | https://www.cgs-cimb.com 2021-06-17
SGX Stock Analyst Report ADD MAINTAIN ADD 2.190 UP 2.090