SPH

SPH: Morgan Stanley initiates coverage with UnderWeight Call and TP $3.50. Note that defensiveness in the price. House see a risk to SPH's dividend given weak ad revenues as growth in the local economy remains tepid. Expect dividend payout to drop 9% in FY13 and 2% in FY14 owing to earnings falls of 2-3%. Forecast a 2% decline in advertising revenue in FY13 owing to cautious marketing spend by companies. Also expect classifieds to remain weak as firms continue to be cautious on employment. Retail properties generate stable rental but upside is limited given softening consumer sentiment. Note that SPH trades at a 2013 P/E of 18.7x, above its 15.8x long-term average and at a 23% premium to MSCI Singapore (above the 6% LT average). SG REITS and telecoms offer superior yield and earnings growth.