SPH - CGS-CIMB Research 2021-07-19: Looking Good Without Media

SINGAPORE PRESS HLDGS LTD (SGX:T39)

SPH - Looking Good Without Media

SPH's property assets’ operating metrics were encouraging. Media remained weak.
Main focus is to build up asset management capabilities with larger portfolio of defensive assets. Monetisation opportunities seen in digital assets.
Reiterate ADD on SPH, with an unchanged SOP-based target price of S$2.19.

Almost all malls, including Seletar Mall (70% owned by Singapore Press Holdings (SPH, SGX:T39), showed resilience in tenant sales on a q-o-q basis; the exception was Paragon, which was slightly affected by the Heightened Alert in Singapore. Despite the pandemic, Seletar Mall achieved an encouraging +3% rental reversion in 3QFY21.
PBSA achieved ~74% of its target revenue as at 16 Jul 2021 (from 28% at 26 Mar 2021) for Academic Year (AY) 21/22F. Management believes that it is on track to achieve the targeted revenue for AY 21/22F as the pace of bookings gather from Jul to Aug, in line with the release of UCAS entry results and A-Level results.
The Woodleigh Residences’ price continues to improve and has reached an average of S$1,950 psf. As at Jun 2021, 69% of units have been sold, up from 62% last quarter. Meanwhile, Woodleigh Mall has achieved 30% committed occupancy.
Occupancy rate for aged care assets in Singapore improved from 84% in Feb 2021 to 86% in May 2021, while its Japan portfolio occupancy remained at > 90%.
SPH won its first tender as operator of government-built nursing home at Bidadari, Singapore.

The circular for media restructuring has been submitted to SGX for approval, with an EGM scheduled for Aug-Sep 2021. See SPH's announcements. Restructuring is expected to be completed by an uphill task.

SPH continues to build up its asset management capabilities. It is on track to take the remaining 15 alternative defensive assets.
- For aged care, SPH aims to grow this business as another key segment by deploying an asset-light strategy in expanding its Singapore presence, and growing via acquisitions in Canada, Australia and the UK.
- For SPH's digital portfolio, there could be monetisation opportunities from its investments in Carousell, iFAST (SGX:AIY), Coupang and FastJobs.
See the sum-of-part (SOP) valuation details in report attached below. We continue to like SPH for its growing asset management capabilities and numerous capital recycling opportunities.
See
Re-rating catalysts/downside risks include success/failure in spinning of the media business. Read also SPH's ESG metrics in report attached below.

EING Kar Mei CFA CGS-CIMB Research | https://www.cgs-cimb.com 2021-07-19

SGX Stock Analyst Report ADD MAINTAIN ADD 2.190 SAME 2.190