Challenging  outlook  for  non-rental  businesses.  1QFY13  N&M advertisement revenue had declined 2% YoY to S$205m. With the government's expectation of a moderate GDP growth forecast of between 1-3% ahead, we lower our FY13 N&M advertisement revenue forecast by 2.7%. SPH's other business segment revenue fell 34.3% YoY during the period to S$10.4m. This was mainly due to the timings of the exhibitions business of which certain shows  were  brought  forward  to  4QFY12.  We  have  consequently  lowered  our  FY13 revenue  by  18%  for  this  segment.  On  a  brighter  note,  rental  income  remained  strong, growing 3% YoY to S$48.2m on the back of higher rental rates from Paragon.   

Lower  newsprint  costs  partially  cushioned  increase  in  other  operating  expenses.Newsprint  charge  out  rates  were  down  7%  YoY  to  US$644/MT  (-2%  QoQ)  in  1QFY13. This  helped  to  partially  offset  against  higher  other  operating  expenses  which  grew  15% YoY to S$33m mainly due to increased business activities for the online businesses, which we expect to be a growing segment going forward.  

Maintain  NEUTRAL,  dividend  yield  to  support  share  price.  We value the core media segment based on 11x FY13 P/E, Paragon (S$2.5b) with assumption of a 5% revaluation gain, Clementi Mall  (S$266m) with assumption  of  average  passing rent of  S$15/sqft, cap rate of 5.5%, M1 and Starhub at DMG TP and investments as at Nov 12.

Source: OSK