SPH: Citi maintains Buy with $4.40 target, post meeting with mgt. Continues to like company as a defensive play, and for its high yield. Expects display ads to be key growth driver, consistent with Singapore’s strong GDP growth, although Classified growth should moderate, while circulation should stay lackluster...
Nevertheless room for margin expansion likelylimited, as higher turnover should be partially offset by increments in newsprint cost (US$529/ton ton in 3Q10 vs. current spot US$640/ton) and reinstatement of variable bonuses. Going forward, mgt to focus on the commercial space with less emphasis on residential, due to better margins and group’s experience with Paragon, Clementi Mall.
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