Monday, 14 May 2012

Singapore Press Holdings

SPH is Southeast Asia's leading media organization with print as its core business. Its source of revenues includes:
  •  Newspaper - Dominant newspaper publisher in Singapore. Publishes 18 out of 19 newspaper title in Singapore 
  • Broadcasting - 2 Radio Station and 20% stake in free-to-air TV
  • Magazines - Publishes more than 100 magazine titles. Regional Expansion through acquisition and organic growth.
  • Event Hosting - Mega events such as COMEX and IT Show
  • Out-Of-Home(OOH) Advertizing - 11 LED screens strategically located in town area. More than 500 plasma and LCD screens at major malls and banks.
  • Properties Rental - Paragon & Clementi Mall.
  • Investment - More than S$1b in investment fund. 39.7% of invested fund are telco related.
  • New Media - News portals, Online Classified, Search and Directories
 Financial Information

2011 (S$'000) 2010 (S$'000)
Operating Revenues 1,250,972 1,381,071
Profits 409,038 539,103
Operating Margin 32.70% 39.00%
Current Assets 1,209,460 1,648,623
Current Liabilities 487,339 989,911
Current Ratio 2.48x 1.76x
Non-Current Assets 2,679,314 2,585,379
Non-Current Liabilities 1,094,846 938,065
NAV $1.39 $1.39
Price/NAV 2.76x
EPS $0.24 $0.31
PE Ratio 16.00x 12.39x
Dividends Yield 6.25% 7.03%
Dividends Payout Ratio 94.40% 80.40%
Return on Assets 10.00% 11.80%
Return on Operating Revenue 31.10% 36.00%
Return on Equity 17.40% 22.40%

Composition of Revenue

As Seen from the revenue composition, the main source of income for SPH comes from advertising through print press. This make SPH a rather cyclical stocks as opposed to what I initially thought. Reason being, during and economic downturn, firms are likely to cut down advertising cost. With lower volume of advertisement, it would adversely affect SPH main source of income. Secondly, during a downturn, recruitment would fall, leading to a fall in recruitment ads which again adversely affect SPH source of revenue generation.

From the Bar Charts which shows the Profit/Revenue/EPS/ROA  for the past 5 years, a downward trend can easily be observed, suggesting a shrinkage of the industry. This does not come as a surprise as the generation move away from the traditional printed news to more convenient and freely available sources of news on the internet. The challenge remain for SPH to keep in pace with the changes as I can only imagine the pace of such changes would accelerate in the future. Recognizing such changes, we can see that SPH is actively seeking alternative source of income, moving into the new media and property sector, especially with the recent acquisition of Clementi mall in addition to the Paragon to  boost rental revenues. However, the acquisition of Clementi mall is a joint venture by SPH and NTUC, and based on other bloggers with much more investing experience than I do, NTUC know nuts about developing shopping malls that can attract consumers.

Dividends History 

2006 2007 2008 2009 2010 2011
$0.24 $0.26 $0.27 $0.25 $0.27 $0.24

Technical Analysis
(1-year daily chart - click to enlarge)

  •  Double top at the end of strong uptrend with Divergence pattern observed on the Stochastic oscillator - Very bearish signal
  •  Based on Fibonacci retracement, it is currently testing the $3.84 level. 
  • Next resistance level - $3.80, which also coincide with the 150SMA, indicating that it may be a strong level of resistance.   
Personal Opinion
With shrinking core business activities and cyclical nature of the stocks, I will stay away from this stock as the current 6+% yield (which is approximately the same as starhub) failed to attract me. However, I might review the stock again if the dividend yield increased to 7 or even 8%.  


  1. Hi

    While it is indeed core activities are coming down, SPH can be considered mature and thus it is no surprise that its core activities are coming down a bit.

    Having said that I dont think it will come down to yield us 7-8% yield, while I hope so.



  2. I like to say that an investment in knowledge pays the best interest.

    dividend stock Singapore