8 Things Investors Should Know About Singapore Press Holdings Limited’s Latest Earnings from Management
Singapore Press Holdings Limited (SGX: T39), which is better known as SPH, is one of the cool companies in Singapore’s stock market that shares webcasts and/or transcripts of their earnings presentations.
In mid-April, the company released its second quarter earnings for its financial year ending 31 August 2017 (FY2017). I recently spent time watching SPH’s earnings presentation and noted down eight things that may interest investors.
As a quick background, SPH is a publisher of many of Singapore’s major newspapers. Beyond newspapers, the company also engages in property development and investment, and other activities such as events management. As part of its property-related business, SPH is the majority owner and manager of SPH REIT (SGX: SK6U), a real estate investment trust that invests in retail malls.
With that, here are my notes:
1. SPH reported a 27% drop in net profit for the first half of FY2017. To be sure, the company took a $16 million charge in the first quarter of FY2017 as part of its review of its media business and an impairment at its associate. The company’s net profit was actually flat in the second quarter.
2. For the first half of FY2017, the Media segment and Property segment were the major contributors to SPH’s operating revenue, making up around 72% and 24%, respectively, of the total pie.
3. The Media segment’s revenue declined by 10.6% in the first half while the Property segment showed modest growth of 1.3%. SPH said print ads continue to decline while there was minor positive growth in circulation revenue. The company added that the Property segment held up well despite the headwinds in the retail industry.
4. From a profit before tax standpoint, the Media business experienced a 50% decline while the Property segment held up better with an 11% increase.
5. SPH said that there were three factors that lead to the increase in profit before tax for the Property segment. One, its three malls (Clementi Mall, Paragon, and Seletar Mall) held up well. Second, there was a one-off property tax charge included in the first half of FY2016. Third, SPH increased its stake in Chinatown Point.
6. SPH also said that all of its three malls effectively have 100% occupancy. But, rental reversions have been in the muted single digit range. SPH expects the tough retail environment in Singapore to linger.
7. The daily average newspaper circulation for SPH was kept at roughly the same level compared to a year ago. This comes despite a price increase that SPH implemented for its publications.
8. SPH has a $1.1 billion group investable fund which consists of equities, bonds, investment funds, and cash and deposits. The fund has returned around 4.2% annually since its inception in 2001.