SPH

SPH: Reported 3Q13 results which were in-line, with bottom-line largely boosted by a one-off gain. 3Q13 revenue of $325m (-2% y/y, +15% q/q) and net profit at $187.5m (+81% y/y, +162% q/q). Strong bottom-line was largely driven by a one-off item, namely a fair value gain of $111.4m arising from a change in recognition of investment properties from cost to fair value basis, and a $26.2m impairment loss on certain investments. Barring which, 3Q13 core net profit at $100.5m, -3.1%. Lower y/y top-line was largely attributed to a decline in revenue from the group’s Newspaper and Magazine business, due to a fall in advertisement revenue from the property and transport sectors, following the launch of cooling measures on the property and automotive sector in January this year which hampered sentiments. Going forward, SPH expects its advertising revenue performance to be driven by market conditions and consumer sentiment in the key advertising sectors, and will continue its strategy to invest in online media and pursue growth opportunities, while aiming to sustain its core newspaper business. Despite a muted set of results, most brokers believe that the group’s share price in the near-term could be supported by the anticipation of a special dividend, following its widely anticipated REIT Spin-off, although we note that any near-term positives from the spin-off would have likely been already priced in, after the group lodged its prospectus with MAS. At current price, SPH trades at 19x forward P/E, with an estimated 9.3% yield which is inclusive of a special dividend for FY13. Latest broker ratings as follow: Maybank KE downgrade to Hold from Buy with $4.50 TP Deutsche maintains Hold with $4.09 TP Nomura neutral with $4.28 TP UOB Kay Hian maintains Hold with $4.25 TP