SPH

SPH: FYAug14 results were in line. Net profit fell 6.2% to $404.3m, whereas revenue dipped 2% to $1.2b, as newspaper and magazine revenue declined 6% to $931.7m on the back of lower ads and circulation revenue. This was mildly offset by a 3.5% increase in property segment to $205m on the back of higher rental income from Paragon and The Clementi Mall. For the year, a $52.9m one off gain on partial divestment of a jointly-controlled entity was also booked, while share of losses from associates worsened from $5.6m to $30.7m, mainly due to the regional online classified business. Going forward, management expects newsprint prices to soften in the near term on demand-supply dynamics. Paragon and The Clementi Mall is expected to perform steadily, while the Seletar Mall is targeted to open in November 2014. Final and special DPS of 8¢ and 6¢ respectively announced, bringing full year dividend to 21¢ (FY13:22¢), but its payout ratio has increased to 107.8%. CIMB thinks that this is unsustainable and unless SPH finds a good business driver, dividends could be at risk. SPH is currently trading at 16.7x FYAug14 P/E, and 1.8x P/B. Latest broker ratings: Maybank-KE maintains Hold with TP of $4.10 CIMB maintains Reduce with TP cut to $4.03 from $4.09 OCBC maintains Hold with TP of $4.13 UOB Kay Hian maintains Hold with TP of$4.30