SPH shares slip 1.7% despite higher profit - Oct 13, 2004 (BT)

BackOct 13, 2004

The Straits Times / The Business Times News On SPH

SPH shares slip 1.7% despite higher profit

Oct 13, 2004
The Business Times


SHARES of Singapore Press Holdings retreated yesterday despite the media group's full-year net profit rising 44 per cent to $546.3 million.

The stock dipped 1.7 per cent or eight cents to close at $4.76, with 9.18 million shares traded but not before it hit an intra-day high of $4.88.

The pullback came amid a broad market fall which saw the Straits Times Index drop 20.95 points to close at 1,971.04. SPH's price fall also came after gains in recent months which saw the stock rising from a post-share split price of $4.32 in June to Monday's $4.84.

Although SPH's net profit came below expectations of analysts polled by Reuters and Bloomberg, some brokers said the results were in line with expectations as the variance was largely due to an early recognition of a restructuring charge involving SPH's TV operations.

Although analysts of broking companies were mixed about the prospects of the group, the general bias is still firm, with some maintaining their 'buy' or 'hold' calls.

Kim Eng Research was one of those which maintain a 'buy' call on the SPH stock, saying 'things can only get better at SPH'.

'It remains SPH's policy to reward shareholders with special dividends regularly,' Kim Eng said in a note yesterday. 'Hence, we believe there is a good chance that the gain from the sale of its StarHub stake of up to $144 million (up to nine cents per share) will be paid out as interim dividends in FY05.'

It also said SPH is likely to enjoy 'good growth in print advertising revenue', thanks to rising demand as well as the 5-10 per cent increase in ad rates effective in FY05.

GK Goh Stockbrokers said it has adjusted its forecast for SPH's FY05 net profit to reflect the exceptional gain from the sale of the publisher's 9 per cent stake in StarHub.

'We have maintained our FY05 pre-exceptional net profit at $324.5 million,' it said in a note.

'Although SPH is trading marginally above our SOP (sum-of-parts) value of $4.72, we maintain our hold' recommendation as the stock is supported by a fairly attractive gross dividend yield of 5.2 per cent'.

DBS Vickers said the results were below its expectations because of a $65.3 million write-off, which is due to the restructuring of SPH's broadcasting assets. 'On the positive side, the board raised its dividends,' analyst Chris Sanda wrote. 'At this point, we see SPH as approaching fully valued with the core business having about FY05 16.4x multiple.'

'We maintain our hold' recommendation.'

Credit Suisse First Boston raised its price target 3 per cent to $4.96. 'While we are positive on the immediate financial impact of the industry consolidation exercise, we are less enthusiastic about the longer-term strategic implication for SPH,' said analyst Clarice Koo.

Nomura Securities, Macquarie Research and Citigroup Smith Barney too issued 'buy' calls.