SPH

SPH: Reported 1Q results, in line with expectations, with rev at $318.7m, -10%YoY and net profit of $102.3m, -29.3%YoY but +35.9%QoQ. With consensus estimates earnings for FY11 at $400m, 1Q 11 results looks pretty much in line to achieve Full yr forecast. The YoY rev decline was due to a 63% decline in property revenue due to Sky@eleven contributions a yr earlier….

Recurring revs surged 12%YoY to new high, although margins weakened. Grp booked $206m 1Q11 ad revs, +13% YoY, along with a 26% increase in rental income (Paragon rental revisions and increased floor area) and 22% jump in other revs (increased efforts in internet, outdoor and events management businesses), drove 1Q11 total revs (ex Sky@eleven) to a new S$319m high…

Rev gains were partially offset by a 14% increase in operating expenditure to $178m (higher variable bonus, partial wage restoration and higher newsprint), which was 5% above forward….

Going forward, grp expects moderate newsprint price increases over the year due to cost pressures and rising demand, while its Clementi Mall has commenced operations, with full tenancy commitment expected only when the mall officially opens in Apr 2011. To date, 85% of retail space has been taken up….

Deutsche Bank maintains its Buy Call with SOTP of $4.70, similarly Kim Eng maintains Buy with $4.75 TP. Note that SPH is trading at 14.6x core PE, which is relatively undemanding vs the 17x average core PE over the past 3 yrs. Technically, stock unlikely to break recent $3.95-$4.20 trading range.