SPH

SPH: 2QFY14 net profit climbed 7.5% y/y to $81.3m, while revenue fell 1.2% to $278.8m, due to contraction from ads (-7%) and circulation (-3%) revenue. This was mitigated by higher rental income (+3%) from Paragon and Clementi Mall, and revenue from other sources. Operating expenses were higher (+13.7%), partly attributed to 2 one-offs: $9.9m impairment charge on removal of one of its press lines, and $10.4m special bonus. The Group also took an impairment on portfolio investments, which led to a net loss from investments of $5.5m vs a net gain of $4.2m a year earlier. Bottomline was buoyed by a $52.8m gain from the partial divestment of 701Search, an online classified website. Maybank KE expects SPH’s core media business to continue to languish given the modest outlook for the economy and the house’s negative view on the property market. The house also highlights how property segment is the only growth driver, albeit a weak one. Interim dividend of 7¢ declared. SPH trades at 21.1x annualized 2QFY14 P/E and 1.94x P/B Latest broker ratings: Maybank KE: Hold, TP reduced to $4.11 (from $4.18) Deutsche: Hold, TP $4.18