SPH

SPH: Released FY10 results, with rev up 6.1% YoY at $1.38b, above consensus estimates, while operating profit was at $539.1m up 8.5% YoY, with Ebitda Margins improving YoY to 46.3% vs 45%. Strong performance was attributed to rebound in advertisement sales and profits from Sky@eleven and Shareholders were rewarded with a 20c final dividend (7c interim and 13c special), bringing full yr div payout to 27c, translating to a div yield of 6.4%......

On the back of strong results, Kim Eng maintains buy call with TP of $4.70. Highlights that outlook for print advertisement demand in FY11F remain buoyant due to consumption growth, while grp has adjusted its pagination for The Straits Times since August to optimize the layout for news reports and display ads to enhance cost efficiency.…….

Further add that sale proceeds from Sky@Eleven has boosted grp’s investible fund from $0.8b to $1.5b and a white site next to Jurong East MRT station could be their next bidding target for a potential development into a retail/commercial project. Even if acquisition does not materialise, grp could repay a $570m loan and still return surplus capital to shareholders…..

Similarly Deutsche maintains buy call and raises TP to $4.70 from $4.60 based on SOTP valuations. Highlight that in absence of Sky@eleven rev, investor’s attention likely to revert back to core businesses, esp ad revenues, which is expected to remain robust. Following a very strong 2010, broker expect 2011E rev to grow at a relatively robust 7%, while 3 yr core net profit CAGR is estimated to be at 8%.