• 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.
• SPH's 9MFY21 media digital circulation was flat as print circulation’s decline was offset by growth in digital circulation. Media’s 9MFY21 revenue declined 16.8% y-o-y, led by newsprint ad decline. With production cost on the rise since 1QFY21, turning around media remains--> 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.

• Re-rating catalysts/downside risks include success/failure in spinning of the media business. Read also SPH's ESG metrics in report attached below.

Source: CGS-CIMB Research - 19 Jul 2021