SPH’s 3QFY19 results came in below our expectations. Operating revenue fell 1.6% YoY to S$246.1m on the back of lower print advertisement and circulation revenue, as well as the absence of contribution from Shareinvestor.com holdings following its divestment in Nov18. However, the decline was partially offset by rental revenue from the group’s Purpose-Built Student Accommodation Portfolio, as well as SPH REIT’s Figtree Grove Shopping Centre in Australia.

The group recorded impairment charges on goodwill and intangibles relating primarily to the Aged Care business, owing to the recent increase in buildown-lease nursing home bed capacity coming on stream. The group’s share of results of associates and JVs increased from S$0.3m in 3QFY18 to S$10.8m in 3QFY19 due to the divestment gain recognized from the sale of Chinatown Point.

After accounting for one-offs, core PATMI came in at S$39.4m (-32.0% YoY), constituting 18% of our full-year forecast. We maintain our HOLD rating but place our FV estimate of S$2.55 under review.

Source: OCBC Research - 15 Jul 2019