SPH

SPH: Could see positive sentiment, with SCB and Macquarie coming out with positive reports on the Co. - SCB maintaining O/p with a $4.99 TP. Note that SPH has risen 7% following the co’s announcement that mgt was exploring the possibility of a REIT listing on SGX. A REIT listing is likely to provide a secure dividend stream and will be value enhancing. House considers 2 likely scenarios, in the first, SPH will take a 40% stake in the REIT and pay a special div in FY13. In the second, SPH will invest most of the proceeds in a value-accretive media opportunity, and take a 40% stake. House note however that SPH offering a special dividend of $1.46 is the likelier of the two scenarios. Add that despite rising 16% last year, SPH remains cheap on dividend yield and growth. Its 6.1% (2013E) yield is the highest among classic Singapore yield plays and is 39% above the peer group average. House raise price target 14% to factor in the prospect of a special dividend in its DDM valuation. -Macquarie maintains O/p, TP $4.71, note that probable Reit listing triggers value. Reiterating that the property part of SPH’s business is grossly undervalued and see another 6% upside plus ~6% dividend yield in the stock. REIT listing could be at S$3.5-4.0bn equity value. Believe Paragon and Clementi malls will be injected and Sengkang mall (opening end-2014) will be kept as a pipeline asset. Additional income could be distributed via special div or in specie: see an additional value creation of ~S$0.95cents/sh for SPH. Incorporated minimal 2-3% profit growth in its core media business over the next 3 yrs and given it a 12x 1 year forward target multiple. A solid defensive stock with div yield of ~6% and the Reit listing could trigger another 5-10% run.