Established in the year 1984, Singapore Press Holdings Ltd (SPH) is the leading media conglomerate in Singapore. It has been a long-time constituent of the Straits Times Index (STI) and is well-known to be a ‘Blue-Chip’ stock which has high dividend payouts to its shareholders.

However, times are changing. There is a major shift in how we now consume content, from traditional media such as newspapers, radios and magazines to social media, mobile and the internet. SPH is mindful of these changes and is in need of a transformation to stay relevant. In this article, I’ll list down 9 key things that you need to know about SPH before you invest. It also includes a brief discussion of SPH’s recent investments towards a sustainable future.

#1: Stock Symbol

Ticker Symbol: SGX: T39
Market Capitalization: S$ 4.05 Billion (18 March 2018)

Share Price: S$ 2.51 (18 March 2018)

Industry: Media and Property

#2: The Business

SPH derives income from three main businesses:

  1. Media
    This includes both printed media such as newspapers, magazines and radio stations and digital media. SPH owns 18 newspaper titles which are available in 4 different languages, produces over 80 magazine titles, runs 3 radio stations, and provides outdoor advertising services based in Singapore. In 2017, this division has made S$ 725.4 million in sales. It is the largest sales contributor as it accounted for 70.3% of the total group revenue made by SPH in that financial year.
  2. Property
    SPH has 70.2% interests in SPH REIT, a retail-based REIT that owns two properties: the Paragon and the Clementi Mall. In addition, SPH owns the Seletar Mall, a 6-level shopping mall which is connected to Fernvale LRT station. In addition, SPH is into property development. It has developed Sky@eleven, a 43-storey residential condominium at Thomson Road. In 2017, it has made S$ 244.2 million in sales, hence, accounting for 23.6% of SPH’s group revenue in that financial year.

  3. Others
    This includes a cluster of businesses which include online classifieds, events and exhibitions, education and healthcare. In 2017, SPH made S$ 62.9 million in sales from these businesses. As such, the division is still relatively small in its contribution to SPH as a collective group.

#3: The Financials

From 2013 to 2017, SPH has recorded continuous decline in both group sales and operating profits. The decline is mainly attributed to a continuous drop in sales from its media division due to falling readership for its newspapers over the last 5 years. This was offset by higher sales from its property division.

Group sales have fallen from S$ 1.24 billion in 2013 to S$ 1.03 billion in 2017. It had caused a reduction in operating profits from S$ 400.2 million to S$ 236.7 million during the 5-year period. Thus, SPH’s shareholders’ earnings had fallen from S$ 431.0 million in 2013 to S$ 265.3 million in 2016. In 2017, it reported an increase in shareholders’ earnings to S$ 350.1 million. Its earnings in 2017 were not contributed to an improved performance of its core business, but, from receiving S$ 149.7 million in gains from divestment of its entire interest in 701Search Pte Ltd.

Source: Annual Reports of SPH

#4: Balance Sheet Strength

As at 30 November 2017, SPH has reported having a total of S$ 900.5 million in long-term borrowings. Its debt-to-equity ratio of 25.2%. Thus, it is like one person who has S$ 25.24 in long-term borrowings from every S$ 100 he has.

Also, SPH has reported S$ 1.03 billion in current assets and S$ 1.26 billion in current liabilities. Thus, its current ratio is 0.82. This is similar to a person having savings equivalent of just under 10 months’ worth of living expenses.

#5: Recent Investments

Here, I’ll list down SPH’s latest investments made to mitigate its ongoing fall in sales by its media division.

  1. Orange Valley Healthcare
    SPH has made its maiden venture into Singapore’s healthcare sector. On 25 April 2017, it had announced the acquisition of Orange Valley Healthcare, among the top 3 nursing home operators in Singapore at S$ 164 million. Presently, Orange Valley Healthcare has 5 homes that house 900 beds located across Singapore.
  2. Han Language Centre
    On 4 August 2017, SPH has acquired 75% interests in Han Language Centre, Singapore’s biggest Chinese tuition operator for a total price of S$ 8.5 million.
  3. Perennial Chinatown Point LLP
    On 3 November 2017, SPH has acquired an additional 3.33% stake in Perennial Chinatown Point LLP, the owner of the retail mall and four strata office units located at New Bridge Road in Singapore for S$ 5.4 million. Upon its acquisition, SPH owns 30.68% interests in Perennial Chinatown Point LLP.
  4. Mindchamps Preschool Ltd
    On 10 November 2017, SPH has acquired an additional 4.8% stakes in Mindchamps Preschool Ltd, the owner & operator of preschools and infant care centres for S$ 3.96 million. After this acquisition, it would own 26.84% shareholdings of Mindchamps Preschool Ltd.

  5. DC Frontiers Pte Ltd
    On 31 January 2018, SPH has acquired an additional 5% stake in DC Frontiers Pte Ltd, the operator of ‘Handshakes’ which is an analytics platform that maps out relationships and events between companies and persons in the corporate ecosystem for S$ 2.11 million. Upon its acquisition, SPH would own 25% interest in DC Frontiers Pte Ltd.

#6: New Development Project

In addition to its recent investments, SPH is also embarking on new property development projects for additional sources of income. SPH has formed with Kajima Development Pte Ltd a consortium and has submitted a bid on for a 99-year leasehold site at Upper Serangoon Road, Singapore at S$ 1.13 billion. On 21 June 2017, the consortium won the bid and the two partners would be taking equal stakes in the joint venture.

The consortium plans to develop over 600 residential units with a retail or a commercial component which spans across 310,000 sq. ft. in gross floor area.

#7: Valuation

As I write, SPH is trading at S$ 2.51 a share.

In 2017, SPH has recorded earnings per share (EPS) of S$ 0.22. This figure is inflated by gains arising from the disposal of 701Search Pte Ltd and as well as fair value changes in investment properties. As such, it is less meaningful for us to calculate its P/E Ratio.

Over the last 5 years, SPH has recorded continuous decline in dividends per share (DPS). As such, it is also not meaningful to calculate its gross dividend yields.

Source: Annual Reports of SPH

#8:  Investors Relation

For further enquiries or to request for additional investment information on SPH’s Investors Relation matters, you may contact:

Telephone: (65) 6319 6319

Email: sphir@sph.com.sg

Website: http://sph.listedcompany.com/home.html

#9: Major Shareholders

As at 3 October 2017, the substantial ordinary shareholders of SPH are:

– Citibank Nominees Singapore Pte Ltd: 10.60%

– DBS Nominees Pte Ltd: 10.30%

– HSBC (Singapore) Nominees Pte Ltd: 4.32%

As at 3 October 2017, the substantial management shareholders of SPH are:

– The Great Eastern Life Assurance Co Ltd: 22.60%

– Oversea-Chinese Banking Corporation Ltd: 16.80%

– NTUC Income Insurance Cooperative Ltd: 16.35%

– Singapore Telecommunications Ltd: 13.30%

– DBS Bank Ltd: 9.50%

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2 COMMENTS

  1. Hi JT

    Thanks for the comment. Here’s my input. The objective of stock investing, at least for me, is to grow wealth sustainably over the long-term. The key words are ‘Growth’ and ‘Sustainability’. Yes, you may calculate its P/E Ratio and Dividend Yield which is 11.4 and 5.98% respectively based on figures of 2017. But, the question is then, ‘Can SPH sustain profits in the future as it has been experiencing a drop in readership for its newspapers for quite some time?’ Also, the reason why I did not rely on P/E Ratio of 11.4 calculated is because its earnings were inclusive of S$ 149.7 million in gains from disposal of 701Search Pte Ltd which is a one-off gain and S$ 57.4 million in fair value gain of investment properties which are gains that are non-cash in nature. These gains should be excluded as we are looking for stocks that can generate recurring & growing profits from its primary core businesses. Hopefully, this input is helpful as you journey your way to investment success.

  2. Thanks for the write up, Ian.

    Point 7, without understanding your intention, feels glaringly open ended.

    It’s like you started the point, gave a couple of factors that you believe won’t help in the valuation, then abruptly stopped there.

    I don’t imagine you’re intentionally skipping giving a valuation.

    Can you complete point 7 then?

    Or did you have something else in mind?

    Thanks

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