While we do not see any near-term share price catalysts, the annual dividend yield of 4.4% remains decent.
Maintain HOLD. Target price: S$4.20. Entry price: S$4.00 and below.
■ Advertising revenue contraction is tapering off. Singapore Press Holdings’ (SPH) advertising revenue (AR) contraction appears to be tapering off. Our monthly page monitor of The Straits Times suggests advertising spending (adspend) contracted by 2% yoy in 3QFY15 (Feb-May 15) vs a reported advertising revenue contraction 9% yoy in 2QFY15. This contraction is less than 1QFY15’s -9% yoy.
■ Flat share price but dividend yield is decent. SPH’s print revenue is expected to perform in tandem with Singapore’s muted GDP growth which is projected at 3.3% for 2015. Traditionally, the share price has had a good correlation with domestic economic growth. The share price is expected to be flat, but annual dividend yields of 4.4% for FY15-17 are decent amid a low interest-rate environment.
■ Focus is on property initiatives. As the media business remains a mature business, we expect SPH to rein in costs and intensify its search for new business initiatives. Seletar Mall – a 70:30 JV between SPH and United Engineers – obtained Temporary Occupation Permit (TOP) on 28 Oct 14 and opened its doors to shoppers on 28 Nov 14. The fourstorey family-oriented mall houses more than 130 brands and has a diverse mix of anchor tenants including premium supermarket FairPrice Finest, cineplex Shaw Theatres, food court Foodfare, Japanese casual clothing company UNIQLO, ladies-only fitness centre Amore Fitness & Boutique Spa and department store BHG. Given that the media business remains as a mature business, we expect SPH to rein in costs and intensify its search for new business initiatives.
■ No change in our earnings forecasts. Weak AR remains as a key risk.
■ Maintain HOLD. Our target price of S$4.20 is based on a SOTP valuation. Our recommended entry price is S$4.00 and below.
SHARE PRICE CATALYST
■ Share price catalysts are lacking. Traditionally, the share price has had a good correlation to advertising revenue growth and hence, our monthly page-counts. (Read Report)
Source : UOB KayHian Research