SPH

SPH: FY13 results were largely in-line. Net profit -25% y/y to $431m, due to higher fair value gains on investment properties recorded in FY12. But excluding the fair value gains FY13 underlying Net profit at $320m was still down 15% YoY due to weakness in the core media business. A 15c/share final dividend was declared, which, along with 7c/share interim dividend, represented 96% payout. There was sustained weakness in SPH’s core media business, with FY13 newspaper and magazine revenues falling 4% YoY to $991m. This was partially offset by a 3.5% Y/Y property revenue gain. Overall, FY13 Group revenues -2.6% Y/Y to $1.2b. EBITDA margin dived 320 bps Y/Y to 37.1%, which represented the lowest level in a long time. largely due to higher-than-expected other operating expenses (nonrecurring charges and step-up in promotion activities). In view of the challenging outlook for the core media business, management is increasingly focused on cost management. Management also announced the establishment of a $100m New Media Fund, for the purpose of investing in media-related businesses to drive growth. Due to the typical start-up nature of such businesses, expect minimal returns within the near to medium-terms. Latest ratings as follows: CIMB maintains Neutral with $4.11 TP Deutsche maintains Hold with $4.09 TP OCBC maintains Hold with $4.14 TP