Research firms upbeat on SPH, raise price targets - Oct 16, 2007 (ST)

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The Straits Times / The Business Times News On SPH

Research firms upbeat on SPH, raise price targets

Six investment research firms set price targets of $5 and above per share.

By Chua Hian Hou
Oct 16, 2007
The Straits Times

INVESTMENT research houses have given the thumbs up to the latest full-year showing from media company Singapore Press Holdings (SPH).

Of the seven firms to publish research notes on SPH following its results announcement last Friday, six - DBS Vickers Securities, UOB Kay Hian, Kim Eng Research, JPMorgan, CIMB and Credit Suisse - were positive about the company's performance and set price targets of $5 and above per share.

The outlier was Goldman Sachs, which had a 'sell' recommendation for the stock, while maintaining its $4.33 share price target.

SPH, which publishes 14 newspapers and more than 90 magazines, had posted a better- than-expected 18 per cent rise in net profits to $506.2 million for the year ended Aug 31.

This came on the back of a 13.6 per cent rise in revenue to $1.16 billion, up from $1.02 billion the year before.

It also announced a final dividend of 19 cents per share for a total dividend payout of 26 cents this year, up from 24 cents the year before.

In a bullish report yesterday, DBS Vickers Securities' Mr Paul Yong said he continues 'to like SPH and believes that it is undervalued'. Mr Yong, who has issued a 'buy' recommendation for the stock, also raised his 12-month target price for the stock from $5.45 to $5.80.

Another research firm, Kim Eng, called SPH a 'dividend play at a steal' for its policy of giving most, if not all, of its recurring earnings as dividends.

In a research note published yesterday, Kim Eng analyst Chan Choon Jit noted that SPH's core recurring revenue stream - print advertisements - had grown by a healthy 10 per cent or more in the last two quarters. Mr Chan, who also has a 'buy' recommendation for SPH, posted an even higher target price of $5.84 but he did not specify a period for this price.

Goldman Sachs was concerned about the impact of rising labour costs and possibly weaker investment income on SPH in the current financial year, it said in its report, also published yesterday. It maintained its 12-month $4.33 price target for the company.

SPH shares rose four cents yesterday to $4.52, on a volume of 10.37 million shares traded.