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


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.

SPH's property assets outlook looking good

  • 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.

SPH's EGM on Media restructuring to be held in Aug-Sep 2021

  • 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.

Reiterate ADD on SPH, with an unchanged SOP-based Target price of S$2.19

  • 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