SPH’s 1QFY19 operating revenue dropped 1.7% YoY to S$254.3m, with the lower print advertisement revenue partially offset by contribution from the group’s UK student accommodation portfolio.

While the group’s drop in Classified print ad revenue remained steep at 17.1% YoY, the print Display ad revenue drop of 2.7% was a welcomed improvement.

We note that finance cost has increased by 20.8% YoY to S$10.6m, due to the group’s acquisition of the UK student accommodation portfolio and the development of The Woodleigh Residences and The Woodleigh Mall.

Core PATMI grew 1.5% YoY to S$57.9m, after accounting for 1QFY18’s gain arising from the dilution of interest in MindChamps, retrenchment costs, and gain on disposal of investments. We deem this set of results to be broadly in-line with our expectations.

Pending an analyst briefing, we maintain our HOLD rating but place our fair value of S$2.55 under review.

Source: OCBC Research - 14 Jan 2019