HOLD: Deutsche Bank - Mar 21, 2009 (BT)

BackMar 21, 2009

Brokers' Take

HOLD: Deutsche Bank

Mar 21, 2009
The Business Times



Singapore Press Holdings
Deutsche Bank
March 19
March 20
close: $2.42


THE Nielsen Company ('Nielsen') has released its estimates for February 2009 Singapore advertising expenditures (adex).

Total estimated February market adex fell 16.2 per cent year on year (y-o-y) to $128 million, the fastest y-o-y rate of decline in five years and the lowest total adex level since February 2006. However, the newspaper sector performed better than in recent months with the $55 million February newspaper adex just one per cent less than in 2008. However, this y-o-y comparison is slightly distorted by the fact that whereas the 2009 Lunar New Year was in January, in 2008 it was in February (so February 2008 adex was significantly less than the preceding or succeeding months).

Nevertheless, the long-term adex trend is clearly downwards, reflecting recent economic trends. For example, cumulative estimated print adex over the last three months was approximately $205 million, 13 per cent less than in the same period in 2008. Nielsen estimates imply SPH's advertising revenues trending as expected

Based on this data, we estimate SPH booked approximately $150 million advertising revenues during the December 2008 to February 2009 quarter, an approximately 16 per cent decline y-o-y. We therefore expect SPH to have achieved approximately $340 million in H1'09 advertising revenues, 11 per cent lower than in H1'08 and representing 49 per cent DB09e. We maintain our forecast that SPH's FY09e advertising revenues will fall 12 per cent y-o-y especially as these Nielsen estimates suggest that SPH's advertising performance is trending generally as projected.

Clearly advertising revenues are correlated with economic activity and a further deterioration in Singapore's economy could be punitive - an issue to watch closely. But at this stage, advertising appears to be trending in-line with our forecasts and we maintain our estimates and HOLD rating.