Towards Financial Freedom
SPH - Earnings Sans One-Off Items In Line
Excluding one-off items, SPH's 3QFY13 recurring earnings were in line with our expectation at SGD107m (-9% y-o-y, +35% q-o-q). Headline PATMI, which included one-offs comprising a fair value property gain of SGD111.4m and impairment losses of SGD26.2m, rose 81% y-o-y to SGD188m. We adjust our FY13/FY14 earnings by +21/-2% to reflect this. Weakness in publishing remains a concern and catalysts continue to be elusive. Maintain SELL with SOP-based TP of SGD4.00.
- Excluding one-offs, earnings were in line. Singapore Press Holdings (SPH) reported 3QFY13 headline PATAMI of SGD188m (+81% y-o-y, +162% q-o-q) which included the following one-off items: i) a SGD111.4m gain from a change in accounting policy for investment properties from cost to a fair value model, ii) a SGD15.6m impairment charge from an overseas magazine segment due to an unfavourable market outlook, and iii) a SGD10.6m impairment charge on an investment due to a prolonged decline in value. Excluding these oneoffs, recurring earnings of SGD107m were in line with our estimates.
- Print business continues downhill trend. SPH's newspaper and magazine ad revenue decreased by 4.3% y-o-y to SGD198m due to weakness in the property and transport segments while circulation revenue fell 2.3% to SGD50.7m. We think the outlook for print remains muted with the Government's moderate GDP growth expectations of 1%-3% for 2013.
- Property segment remains the bright spot. Property rental revenue grew 3% y-o-y to SGD50.2m on higher rates from Paragon, while income growth from Clementi Mall was stable. The injection of Clementi Mall and Paragon into the soon-to-be listed SPH REIT has its perks, such as cash inflows as well as a special dividend of 18 cents which will boost the Group's FY13 yields to 9.7%. However, we remain concerned over a potential earnings dilution.
Source: OSK
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