SPH

SPH: 3QFY15 results came in ahead. Net profit increased 9.6% y/y to $98.2m, while revenue dipped 0.9% to $306.8m.

Media revenue ($233.1m, +5.6%) was dragged by a fall in advertising revenue, but that was offset by a 16.5% increase in property revenue to $59.4m, boosted by contributions from Seletar Mall which opened in November last year. Other businesses ($14.3m, +21.6%) expanded from new shows and timing of show dates for the exhibition business.

Other operating income rose 146.8% to $7.7m was due to corporate events and a write-back of contingent consideration for an acquired business.

Total operating expenses were 2.4% lower at $209.3m, as newsprint costs fall in tandem with weaker media top line and from lower bonus provision. This was offset by a $1.1m impairment on intangibles.

Share of associates’ loss narrowed by 50.5%, attributable to the regional online classifieds business.
On outlook, management expects newsprint prices to soften in the near term on supply demand considerations. Nevertheless, retail assets like Paragon, Clementi Mall and Seletar Mall should perform steadily as the SPH looks for new avenues for growth.

SPH is currently trading at 21.7x consensus FY8/15e P/E, and 1.8x P/B. It also offers an indicative yield of 3.7%.

Latest broker ratings:
Maybank-KE maintains Hold with TP of $4.10
CIMB maintains Reduce with TP cut to $3.90 from $3.95