SPH's gains rise 14% to $112m as all segments grow - Jan 09, 2007 (ST)

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The Straits Times / The Business Times News On SPH

SPH's gains rise 14% to $112m as all segments grow

By Lee Su Shyan
Jan 09, 2007
The Straits Times

SINGAPORE Press Holdings (SPH) reported that first-quarter net profits rose 14.1 per cent to $112.3 million - mainly thanks to strong investment income. Group investment income soared 52.4 per cent to $29.7 million - partly due to a capital reduction exercise by StarHub which saw the telco returning cash to shareholders. SPH owns less than 0.8 per cent of StarHub.

Investment income was also helped by profits from selling some of SPH's internally-managed investments.

Looking ahead, chief executive Alan Chan said the 'positive business climate is expected to continue providing support to the group's print advertisement revenue'.

Circulation is expected to remain at sustainable levels, while newsprint prices are expected to rise at a moderating pace.

On the property front, Mr Chan said: 'Paragon looks set to continue to generate healthy rental yields on the back of generally bullish sentiments in the property market.'

He also said the Thomson Road freehold condominium being developed by SPH is scheduled for launch in the first half of this year.

For the quarter ended Nov 30, SPH's operating revenue gained 4.2 per cent to $272 million with all segments showing growth.

The key newspaper and magazine segment saw revenue rising 2.6 per cent to $241.5 million. Both print advertisement revenue and circulation registered increases.

The value of print advertisements rose 2.7 per cent to $183.6 million and circulation revenue rose 1.5 per cent to $51.7 million.

While The Straits Times experienced a 0.6 per cent dip in circulation numbers year-on-year, The Sunday Times saw circulation numbers rise 3 per cent.

Also, circulation of The Business Times rose 4 per cent, while Berita Harian surged 10 per cent.

A second key segment - property - registered revenue of $25.6 million, a 7 per cent increase.

A third segment - other businesses which include Internet operations and outdoor advertising - more than doubled from $1.9 million to $4.9 million.

On the cost front, newsprint costs were higher due to higher consumption. Production costs rose on higher circulation sales from magazine operations.

Staff costs were higher after headcount was boosted to support the launch of new editorial products.

Still, despite the cost increases, profit before investment income managed a 4.2 per cent rise to $107.3 million.

Earnings per share edged up from six cents to seven cents, while net asset value was higher at $1.36 per share compared with $1.28 as at Aug 31.

SPH shares ended six cents lower at $4.50 on a volume of 6.7 million shares.

The results were announced after the market closed yesterday.

Investment bank Credit Suisse recently wrote that 'valuations for SPH remain undemanding, in our view.

'Our target price of $4.75 represents 6.5 per cent upside potential...The stock is more attractive on a relative basis, especially versus our expectation of 7 per cent downside for the Singapore market.' Credit Suisse added that the scheduled sales launch of the Thomson Road residential property development early this year and the potential rise in dividend yield further ahead could be positive catalysts for the counter.