Thursday, September 22, 2011


SPH: Deutsche maintains Hold with $3.80 TP. House note that according to the latest data, total advertising expenditure (adex) in Aug surged 16% YoY to S$205m, representing the strongest Aug in many years. Notably, the Aug adex growth was significantly ahead of the average 4% YoY increase recorded YTD and marked the fastest growth since Apr 2010.

Incremental gains were driven largely by TV adex which increased 26% YoY and was a remarkable $15m higher YoY. Newspaper adex was also robust, growing 11% (or $8m) YoY. Elsewhere, Magazine, Poster and Internet adex all registered firm increases while only Bus/Taxi and Cinema adex contracted YoY. Overall, Aug's print adex (Newspaper and Magazine) jumped 12% YoY to S$90m (fastest rate of increase YTD).

Based on current run-rates, house estimate SPH booked approximately $196m 4Q11e advertising rev, along with the $584m 9M11a advertising rev already reported, this would take SPH's FY11e advertising rev to approximately $780m (broadly in-line with house forecasts). But despite Aug's strong adex performance, do not think growth will be sustained at such levels and expectation is for moderation in advertising growth in subsequent months.

While house like SPH for its stable media business and sustainable div yield, have a Hold rating on stock given the modest growth outlook and lack of positive catalysts.

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